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India ETFs at a 52-Week High: Here's Why

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India’s stock market is hovering at a record high. Now, the world’s sixth-biggest stock market, India is passing France for the first time in market capitalization, with the benchmark Sensex surging more than 23% this year. India has recorded the biggest gain in market value this year, posting a rise of 35% from $2.52 trillion on Dec 31, 2020. Since the March 2020 low, India logged about $2.08 trillion market cap or a 159% advancement.

Lower COVID-19 cases and pent-up demand have acted as the tailwind to the Indian market. A rebound in demand has been aiding many industries, starting from autos, where supply is suppressed due to chip shortage, or real estate, which is seeing strong bookings to cash in on the low rates.  Banks and FMCGs are also gaining. Better-than-expected gross domestic product and goods and services tax (GST) collection point toward a sustainable rebound in earnings, per a source.

“Strong liquidity and positive macroeconomic cues are also likely to support domestic markets to continue their movements to record levels. The consumer demand will be closely monitored as it is expected to pick up, given the festive season has begun and the restrictions are continuing to ease. However, concerns on the third wave of the (COVID-19) pandemic still hover," Motilal Oswal said in its report, as quoted on a source.

With the festive and wedding seasons in India approaching, gold prices will also receive great help from retail demand.  Since India is one of the top-consuming countries of the yellow metal, prices of gold along with certain other commodities will have a reason to run.

India is expected to post strong economic growth in the coming quarters, even as inflation, led by food prices, is likely to remain elevated, S&P Global Ratings said recently. The economy is expected to log 9.5% growth in the current fiscal year, followed by 7% expansion in the next year, it predicted. The easing of retail inflation to 5.3% for August is a plus as it would help the Reserve Bank of India maintain its easy monetary policy stance a little longer.

Against this backdrop, several India ETFs have been hovering around a 52-week high. Below we highlight a few.

ETFs in Focus

First Trust India Nifty 50 EW ETF (NFTY - Free Report)

The underlying NIFTY 50 Equal Weight Index is an equally weighted index that tracks the performance of the 50 largest and most-liquid Indian securities listed on the National Stock Exchange of India. The fund charges 80 bps in fees.         

India 50 iShares ETF (INDY - Free Report)

The underlying Nifty 50 Index measures the equity performance of the top 50 companies by free float market capitalization whose equity securities trade in the Indian securities markets. The fund charges 90 bps in fees.             

Wisdomtree India Earnings Fund EPI)

The underlying WisdomTree India Earnings Index is a fundamentally weighted index that measures the performance of companies incorporated and traded in India that are profitable and eligible to be purchased by foreign investors as of the index measurement date. The fund charges 84 bps in fees.

Franklin India ETF (FLIN - Free Report)

The underlying FTSE India Capped Index is based on the FTSE India Index and is designed to measure the performance of Indian large and mid-capitalization stocks. The fund charges 19 bps in fees.        

India MSCI iShares ETF (INDA - Free Report)

The underlying MSCI India Index is designed to measure the performance of equity securities of companies whose market capitalization represents the top 85% of companies in the Indian securities market. The fund charges 69 bps in fees.     

India Invesco ETF (PIN - Free Report)

The underlying FTSE India Quality and Yield Select Index comprises Indian equity securities traded on the regulated stock exchanges in India. The India Index is designed to represent the Indian equity markets as a whole. The India Index has 50 constituents, spread among the following sectors: Information Technology, Health Sciences, Financial Services, Heavy Industry, Consumer Products and Other. The fund charges 78 bps in fees.             

Columbia India Consumer ETF (INCO - Free Report)

The underlying Indxx India Consumer Index is a maximum 30-stock free-float adjusted market capitalization-weighted index designed to measure the market performance of companies in the consumer industry in India. The fund charges 75 bps in fees (read: Will India ETFs Emerge Winner in Post-Pandemic Period?).

India Small-Cap iShares MSCI ETF (SMIN - Free Report)

The underlying MSCI India Small Cap Index is a free-float adjusted market capitalization weighted index designed to measure the performance of equity securities of small-capitalization companies whose market capitalization represents the bottom 14% of companies in the Indian securities market. The fund charges 81 bps in fees.