India’s economy grew at its fastest pace in a year in the April-June quarter, fueled by strong demand and solid services activity. According to a Reuters article, Asia’s third-largest economy recorded a GDP of 7.8% in the June quarter, which beat the estimated 7.7%, as forecast by a Reuters poll. The expansion was notably higher than 6.1% growth as witnessed in the March quarter.

Let’s Dive Deeper Into the Data

As per the Reuters article, service sector was a key driving force behind the robust performance of the country in the June quarter, with both trade, transport and finance and real estate expanding by 9.2% and 12.1%, respectively. Additionally, construction activity showed a strong performance, recording a growth rate of 7.9%.

Private consumption, which constitutes around 60% of India’s economy, expanded nearly 6% year-on-year in the June quarter, significantly higher than the 2.8% witnessed in the previous quarter. Manufacturing also experienced growth in the June quarter, with an increase of 0.2% compared to the previous quarter, reaching 4.7%.

However, the country does face some challenges, as the growth in its capital formation has slowed down. An essential indicator of investment within the country, capital formation fell to 8% year on year from 8.9% as recorded in the March quarter. The unexpectedly low rainfall in August has raised concerns about India's growth prospects in the coming quarters.

Even though some questions still linger around India growth outlook, the country remains one of the fastest-growing major economies globally, further helped by China’s weak economic data.

Positive Factory Activity Data

Fueled by solid growth in new orders and output, India’s manufacturing sector experienced its quickest expansion in three months. As per a Reuters article, the Manufacturing Purchasing Managers' Index, rose to 58.6 in August from 57.7 in July. The PMI index also surpassed a Reuters estimate of 57.5.

However, the increased manufacturing activity did not lead to a quicker pace of job creation. Although job generation remained positive for the fifth consecutive month, it decelerated to its lowest point since April.

Upward Growth Revision

Firms like Nomura and Morgan Stanley revised their economic growth projections for India's fiscal year 2024 upward. Backed by promising economic data for April-June quarter, Nomura raised its GDP growth projection for the country to 5.9% for the year ended March 2024, from previously estimated 5.5%. Morgan Stanley followed suit, raising its projections to 6.4% from 6.2%, per an article in Reuters.

Goldman Sachs and Barclays retained their earlier forecasts for India's GDP growth in fiscal year 2024, with both institutions keeping it unchanged at 6.4% and 6.3%, respectively.

ETFs in Focus

The IMF projects that India will maintain the highest GDP growth rate among all global economies, with a forecast of 6.3% for 2024. With the recent success in its space exploration mission, India's Chandrayaan-3 paints a positive picture for the future of the country (Read: ETFs in Focus on India's Historic Walk on Moon).

Below, we highlight a few ETFs that can help you to diversify your portfolio and tap into the Indian markets.

WisdomTree India Earnings Fund (EPI Quick QuoteEPI - Free Report) ) – up 12.78% year to date (as of Sep 1)

iShares India 50 ETF (INDY Quick QuoteINDY - Free Report) ) – up 7.27% year to date (as of Sep 1)

iShares MSCI India ETF (INDA Quick QuoteINDA - Free Report) ) – up 6.19% year to date (as of Sep 1)

VanEck India Growth Leaders ETF (GLIN Quick QuoteGLIN - Free Report) ) – up 16.73% year to date (as of Sep 1)

First Trust India NIFTY 50 Equal Weight ETF (NFTY Quick QuoteNFTY - Free Report) ) – up 9.29% year to date (as of Sep 1)