India – An economic superpower in the making

We have identified opportunities in financials, consumption, infrastructure, and technology sectors. We believe that many companies within these sectors have the potential to offer attractive returns from a long-term perspective. Abhishek Thepade, our lead portfolio manager of the fund DNB India, is from India, and provides in-depth expertise from his understanding of the culture and region.

In today's world, where the global economy is experiencing a slowdown, India shines bright with an impressive growth rate of approximately 6-6.5%. This performance is not just commendable; it outshines many of its Asian and global counterparts.

Indian companies have reported promising earnings growth, leading to a robust performance of the markets. While valuations may seem high at first glance, we think they are justified by the excellent earnings growth these companies have demonstrated. The combination of strong earnings growth has not gone unnoticed. The MSCI India index has had a compound annual growth rate of 16 percent measured in NOK the last ten years, per September 2023, outperforming MSCI World.

Our optimism for the Indian market is rooted in several compelling factors.

Despite a global downturn, India's macro-economic health remains strong. While it has risen over the last months, inflation is still within comfort zones. Interest rates, even after hikes, remain below their 10-year average, a stark contrast to the developed world which is currently facing inflation and interest rate challenges. Employment, manufacturing, and services are all seeing a growth phase, marking a vibrant economic landscape.

A stable political environment in India has paved the way for significant reforms in taxation, banking, and manufacturing. Increased and improved tax collections have boosted infrastructure spending. The banking sector, revitalized by new bankruptcy laws, is poised for continued growth with an abundance of capital and a dramatic reduction in non-performing loans (NPLs).