India’s economy has been hit by the COVID-19 pandemic. But could the impact of vaccines – combined with the country’s underlying drivers of growth – increase a India-focused stock market in 2021?
India has been hit hard by the pandemic, with more than 10 million cases. Its economy suffered in 2020; In a January 2021 note, IHS Markit estimated that in the 2020-21 financial year ending 31 March, gross domestic product would increase by 8.9% year-on-year.
However, there may be positive signs for the future. The firm notes that economic activity has been recovering since September, and expects GDP growth to rebound by 8.9% in the 2021-22 financial year. Meanwhile, on February 1, the government announced increased spending on infrastructure in its budget, which analysts say could also support growth.
The recovery of India has been led by high-quality companies with large capital, especially those in technology, energy and healthcare, says Rene Reyna, chief thematic and special product strategist at Invesco ETFs & Indexed Strategies. The firm operates the ETF PIN of Invesco India,
a $ 107.2 million fund that had 18.5% returns in 2020 and is about 2% lower so far this year, through January 29th. Reyna says the large information technology sector in India has been a particular driver for the rebound, benefiting from aggressive work-from-home efforts. ”
An extensive version of this report appears on WSJ.com.
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