Watch the video with Andrew Stotz or read a summary of the country profile on India.
Four Pillars of GDP: Heavy Private Consumption
Normally used to sitting in China’s shadow, India has recently surpassed its cousin to become the fastest growing economy in Asia. This is mainly the result of heavy private consumption, but government consumption growth has also helped. Investment is the one segment that has slowed, down -0.67 in contribution to GDP growth compared to +1.36 during the second quarter of 2016. Net exports, which were down in the second quarter, rose in the third quarter.
Highest Earnings Growth in Asia
Consensus earnings estimates are expected to grow at the fastest pace in Asia in 2017, and return on equity next year is expected to be the second highest. These stats are mirrored, however, in a much pricier valuation.
A. Stotz Four Elements: India’s rank relative to Asia
Overall, India is moderately attractive in Asia considering all our four elements: Fundamentals, Valuation, Momentum, and Risk.
Fundamentals: ROE is second highest in Asia at 15.9% expected in 2017.
Valuation: India’s stock market has the highest forward valuation in Asia.
Momentum: The market has a strong earnings momentum but poor price momentum.
Risk: The market has a moderate beta compared to Asia ex-Japan.
Strong performance in Energy and Telecoms
Top 3 largest sectors: Financials: 20% of the market. Consumer Discretionary: 12%. Materials: 12%.
Best sector & stock: Energy: +6.4% & Cairn India: +26%
Worst sector & stock: Real Estate: -11.8% & DLF: -26.3%
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