Post-Election, India Still EM Standout

India Prime Minister Narendra Modi won a third term last week. But his party didn’t sweep to the expected landslide. That means Modi will have to form a coalition government. Despite that disappointment, the MSCI India Index gained almost 1.80% last week. And that indicates global investors are mostly pleased that Modi won another term.

That could pave the way for more upside for India ETFs like the WisdomTree India Earnings Fund (EPI) and the newly minted WisdomTree India Hedged Equity Fund (INDH). INDH could be noteworthy for advisors and investors looking to allocate to India stocks over the near term if the rupee weakens amid concerns about Modi's ability to piece together a government composed of not only his party, but others that are aligned with some of his views.

Yet there could be value in Modi and the BJP being forced to work with other political parties. That could stoke more broad-based, thoughtful approaches to important issues such as infrastructure spending and liberalizing India’s financial markets. Both of those issues could act as longer-ranging catalysts for EPI and INDH.

India ETFs Still Merit Consideration

India ETFs have been among the brightest spots in EM investing over the past several years. Much of that bullishness is attributable to Modi’s reformed-minded approach to the country's economy and financial markets. It’s likely that methodology will continue over the course of this third term.

“In his victory speech, Modi promised even bolder reforms in his third term. [He also] pledged to grow India to the third-largest economy in the world by the end of this decade. He has plans to turn India into a developed economy by 2047—the 100-year anniversary of India’s founding,” according to WisdomTree research.