Weekly newsletter 7 December 2015

Where can investors look for growth in the stock market?

In one of my previous newsletters, I have provided more information about the European equity market and the growth potential there. India was one of the best performing stock market in 2014 with a growth of 29%. In 2015 there have been ups and downs in the Indian stock market, but I think that the coming years the Indian stock market has a positive outlook for investors.

India

New reforms, strong foreign fund inflows, revival of manufacturing, improvement in the macro-economic situation and rise in corporate earnings growth are believed to be drivers for the coming years in the Indian stock market.
“Indian companies have done massive restructuring over the last five years. Almost every business has become leaner and focused on efficiency. Because we don't expect further deterioration, we see operating and financial leveraging show its maximum impact in 2017-18” says Ravi Gopalakrishnan, head of equities, Canara Robeco Mutual Fund. (source http://www.businesstoday.in/moneytoday/cover-story/creating-wealth-in-2015-stock-markets-dream-run/story/214102.html)

See below chart from the Indian stock market history

The Indian GDP has been growing faster since the change of government in India. Narendra Modi (Prime minister of India) is driving for strong economic growth and the slogan “made in India” is becoming more and more reality in India. With more countries and companies investing in India it is becoming more likely that India has strong potential to outperform China in terms of GDP growth the coming years.


 

Investors that have an investment horizon of three to five years, are advised to take a better look at India.
The indicators are positive and the stock market is still relatively undervalued.



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