India's stock market success looks set to continue

India has been the world's fastest-growing major economy for two years running.

India view of the Mumbai skyline from the Malabar district in the city centre
(Image credit: Getty Images)

With the West dogged by talk of recession and China flagging, “India has emerged as a much-needed global good news story”, says Craig Mellow in Barron’s. The local BSE Sensex stock index rose by 18.5% in 2023 and has more than doubled since the pandemic-era lows of 2020. Pro-business prime minister Narendra Modi is likely to win a third term this spring, so expect “the good times... to keep rolling in 2024”.

The “sizzling rally” recently saw the National Stock Exchange of India, one of the country’s two exchanges, surpass Hong Kong as the world’s seventh-largest, says Diksha Madhok for CNN. By total value, Indian stocks already rank fourth globally, behind the US, China, and Japan.

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There have been false dawns in India before, says the Financial Times. But several key trends are now blowing in favour of the world’s fifth-biggest economy. Geopolitical shifts have seen Western capital sour on China, with India emerging as the natural alternative. Government policy is pro-growth and focused on building much-needed infrastructure. The result? India has been the “world’s fastest-growing major economy” for two years running and looks set to continue in that role.

The problem, as Mellow notes, is that “Indian shares are as expensive” as their US counterparts, with the market trading on an average price/earnings (p/e) ratio of 25, a steep premium to the average global emerging-market level of 12. There are also persistent concerns about uneven corporate governance standards in corners of the market.


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Markets editor

Alex is an investment writer who has been contributing to MoneyWeek since 2015. He has been the magazine’s markets editor since 2019. 

Alex has a passion for demystifying the often arcane world of finance for a general readership. While financial media tends to focus compulsively on the latest trend, the best opportunities can lie forgotten elsewhere. 

He is especially interested in European equities – where his fluent French helps him to cover the continent’s largest bourse – and emerging markets, where his experience living in Beijing, and conversational Chinese, prove useful. 

Hailing from Leeds, he studied Philosophy, Politics and Economics at the University of Oxford. He also holds a Master of Public Health from the University of Manchester.