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Time to Buy India ETFs?

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India ETFs have been gaining momentum lately and hovering around a 52-week high. First Trust India Nifty 50 Equal Weight ETF (NFTY - Free Report) is up about 5% past month, while iShares MSCI India ETF (INDA - Free Report) has advanced about 3.3%. Let’s find out the factors that can boost India ETFs in the coming days.

Upcoming General Elections: Modi Likely to Win?

General elections are scheduled in India between April and May, where market-friendly Prime Minister Narendra Modi seeks reelection and is also likely secure to another term. Modi's tenure has seen significant investments from U.S. tech giants in India.

Sustaining a growth rate above 7% for a third consecutive year, particularly in a global slowdown context, could significantly enhance Modi's chances of securing a third term. Foreign direct investment in India has surged in recent years, increasing from $36 billion in 2014 to $70.9 billion in 2023. This influx of investment is driven by India's growing reputation as a business-friendly destination.

India's Tech and Business Ambitions

India is actively promoting itself as a global hub for technology and business. States like Maharashtra, Tamil Nadu, Telangana, and Karnataka are positioning themselves as tech hubs for manufacturing and AI development, as quoted on CNBC.

Major tech companies, including Apple, Google, and Amazon, have made significant investments in India. Apple, for instance, opened its first store in Mumbai, signaling the importance of the Indian market.

India is actively courting investment from U.S. chipmakers. Companies like AMD and Micron are planning substantial investments in the semiconductor industry in India.

Fed to Cut Rates in Late-2024?

There is almost no chance of a Fed rate hike this year. In fact, the Fed is likely to slash interest rates by late 2024, which should cut strength of the U.S. dollar. If this happens, emerging market currencies would gain strength. And like most emerging economies, the Indian economy too should experience a tailwind.

Upbeat Indian GDP Growth

India’s economy grew 7.6% year over year in the third quarter of 2023, following a strong 7.8% growth in the previous period and beating forecasts of a 6.8% rise. The reading is also higher than the Reserve Bank of India projection of 6.5%, per tradingeconomics.

IMF upped India's FY24 growth forecast to 6.7% from 6.3% due to resilience in domestic demand. For FY25 and FY26, India’s GDP growth is seen steady at 6.5%. Reserve Bank of India has estimated 7.4% GDP growth for India in FY24.

ETFs in Focus

Against this backdrop, below we highlight a few India ETFs that have been on a rallying mode lately.

Columbia India Consumer ETF (INCO - Free Report) – Up 2.3% Past Week

First Trust India NIFTY 50 Equal Weight ETF (NFTY - Free Report) – Up 2.2% Past Week

VanEck India Growth Leaders ETF (GLIN - Free Report) – Up 2.0% Past Week

Matthews India Active ETF (INDE - Free Report) – Up 1.6% Past Month

VanEck Digital India ETF (DGIN - Free Report) – Up 1.3% Past Month

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