DeepSummary
The podcast episode discusses the volatility in Indian markets following the recent national elections, where Prime Minister Narendra Modi's BJP party secured fewer seats than expected but still emerged as the single largest party. The markets initially reacted negatively but rebounded quickly as investors gained confidence in policy continuity under a Modi-led coalition government.
The guests, Hiran Dasani, explain that despite the election outcome, India's long-term growth story remains intact, driven by favorable demographics, rising consumption, and increasing competitiveness in manufacturing. Dasani highlights that India's market returns have historically been driven by earnings growth, reflecting the country's nominal GDP growth of around 10-11%.
The episode also explores the changing investor landscape in India, with domestic investors playing a more prominent role in driving the markets, while foreign ownership is currently at its lowest point in a decade. Dasani discusses the sectors and market segments that present attractive investment opportunities, such as consumption, financials, and information technology, particularly in the mid and small-cap space.
Key Episodes Takeaways
- Indian markets experienced volatility following the recent national elections, but the long-term growth story remains intact.
- India's growth is driven by favorable demographics, rising consumption, and increasing competitiveness in manufacturing.
- Domestic investors are playing a more prominent role in driving the Indian markets, while foreign ownership is currently at its lowest point in a decade.
- Attractive investment opportunities exist across sectors like consumption, financials, and information technology, particularly in the mid and small-cap segments.
- India's market returns have historically been driven by earnings growth, reflecting the country's nominal GDP growth.
- While consumption and services have been traditional growth drivers, manufacturing is emerging as an additional growth driver for India.
- Despite the election outcome, there is confidence in policy continuity under a Modi-led coalition government.
- India's demographic dividend, with an average age of 27-28 years, supports long-term growth prospects.
Top Episodes Quotes
- “If you look at India, market returns are in double digit dollar terms over a last 30 year period. And those market returns broadly come from the earnings growth. So nominal GDP grows at about ten to 11%. That leads to corporate earnings growth of about ten to 11%, and that leads to the market returns ten to 11% over a period of time. And that story very much remains intact.“ by Hiran Dasani
- “Foreign ownership of indian equities today is at the lowest point in the last ten years, not at the highest point. About 20% of the market is owned by the foreigners and this is at the lowest number in the last ten years.“ by Hiran Dasani
- “Consumption and services will continue to be the growth drivers, but manufacturing will be the additional growth going forward for India is what we believe.“ by Hiran Dasani
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Episode Information
Goldman Sachs The Markets
Goldman Sachs
6/7/24
Indian markets have endured a wild week, as investors struggle to make sense of an election that has weakened Prime Minister Narendra Modi’s majority. What’s behind the volatility, and are dents forming in India’s long-term growth picture? Hiren Dasani, co-head of Emerging Markets Equity and lead portfolio manager of India Equity Strategies for Goldman Sachs Asset Management, joins Chris Hussey of Goldman Sachs Research to discuss.