India a long-term investment destination even among G-20 countries
Feb 13, 2023, 18:52 IST
- India has consistently delivered 9-11% returns, be it short-term or long-term investment, ranking it among the top 3 in the list of G20 nations delivering high returns.
- Return, consistency, resilience and opportunity are the factors supporting India’s outperformance.
- Moreover, analysts are confident that the home market would do better even in the coming years.
- However, India may face some hurdles as it gets closer to general elections in 2024.
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In the last 20 years – be it short-term or long-term investment – India has consistently delivered 9-11% returns, ranking it among the top 3 G20 nations.Return, consistency, resilience and opportunity are the factors supporting India’s outperformance among other developed and developing peer markers, says Sujan Hajra, chief economist at Anand Rathi, in a report.
Moreover, analysts are confident that the home market would do better even in the next few years. Says Hajra, ‘with rapid all-round progress, India is in for a quantum jump’. India is expected to become the third-largest economy by 2028-29.
The G20 is a group of the world's major economies that represents all inhabited continents, 80% of the world GDP, 75% of global trade and 60% of the world's population.
Short-to-medium term returns in equities
| G-20 countries | 1-year return | 3-year return | 5-year return |
| China | 14.3% | 10.5% | 6.7% |
| Russia | 11.9% | 10.9% | 9.3% |
| India | 11.5% | 11.5% | 11.4% |
| Indonesia | 10.9% | 10.5% | 10.5% |
| Argentina | 8.7% | 5.9% | 6.1% |
| Canada | 8.1% | 6.5% | 5.1% |
| Brazil | 8.1% | 8.5% | 8.8% |
| Mexico | 8% | 7.1% | 7.2% |
| Korea | 7.6% | 7.6% | 7.3% |
| US | 5.9% | 6% | 6.3% |
| Germany | 5.5% | 6.3% | 6.8% |
| Australia | 5.4% | 5.2% | 4.9% |
| Saudi Arabia | 4.2% | 2.9% | 2.9% |
| Turkey | 3.4% | 3.8% | 3.7% |
| France | 2.2% | 2.4% | 2.5% |
| Italy | 0.7% | -1.3% | -3% |
| UK | -0.5% | -0.5% | 0% |
| Japan | -1.1% | 0% | 0.2% |
| South Africa | -1.5% | -5% | -4.8% |
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As predicted by several economists like that of Morgan Stanley, India could well be on its way to becoming the world’s third largest economy and stock market.
In its report titled ‘Why This Is India’s Decade’, the global investment bank says several factors like the rise in offshoring, investments in manufacturing, energy transition and the country’s digital infrastructure would make this a reality. The report also indicated that GDP is likely to cross $7.5 trillion by 2031, more than double the current level.
However, India may face some hurdles in the coming time as it comes closer to general elections in 2024 – to which markets will start factoring the outcomes in the second half of 2023. Apart from this, the trend rate cycle in India, US and across the world along with the corporate earnings will also play an important part in market movement.
Despite several headwinds, emerging markets (EMs) including India continue to thrive and outperform. “During the 2010s EM equities suffered their worst performance as an asset class going as far back as the 1930s. Fast forward 10 years and most emerging countries, with the exception of China, started the 2020s in much better shape economically than in the previous decade,” said Morgan Stanley in a report titled 2023 Investment Outlook.
“Emerging Countries such as Brazil, Mexico, India, Indonesia and the GCC (Gulf Cooperation Council) outperformed not only the MSCI Emerging Markets Index but even the S&P 500 Index in 2022,” added the report.
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In a recent report, Morgan Stanley has mentioned 10 stocks on its focus list - FSN E-Commerce (parent company of Nykaa), Maruti Suzuki, Titan, ICICI Bank, SBI Cards, SBI Life Insurance, HAL, Larsen & Toubro, Infosys and UltraTech Cement.In the long-term period as well, India has continued to perform better with 9-11% returns.
Long-term equity returns among G20 countries
| G-20 countries | 10-year | 15-year | 20-year |
| Indonesia | 9.5% | 9% | 9.5% |
| India | 9.2% | 9.6% | 10.7% |
| Argentina | 6.4% | 6% | 4.5% |
| Germany | 6.4% | 6.2% | 5.8% |
| Mexico | 6.2% | 5.8% | 6.2% |
| US | 6.2% | 5.9% | 5.8% |
| Korea | 5.9% | 5.8% | 7% |
| China | 5.7% | 7.2% | - |
| Brazil | 5.1% | 5.5% | 6.3% |
| Russia | 4.9% | 4.9% | 8.8% |
| Australia | 3.9% | 3.7% | 4.8% |
| Canada | 3.7% | 4.3% | 7% |
| Turkey | 2.7% | 2% | 2.1% |
| Saudi Arabia | 2.6% | 2.7% | - |
| France | 1.2% | 1.2% | 2% |
| UK | 0% | -0.5% | -1.2% |
| Japan | -0.5% | -0.6% | -0.4% |
| South Africa | -2.9% | - | - |
| Italy | -3.2% | -3.2% | - |
Constant inflows from domestic institutional investors (DIIs) like mutual funds and insurance companies have maintained market sanity in the last couple of years despite strong outflows from FIIs during the period.
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