Who is adding India in Every Global Investors Portfolio & Products ?

I am not able to believe that my country India is the fastest growing economy among G20, G7 and even among the global market. I firmly believe that the Indian market- NIFTY 22000 is a bubble and is about to burst at a point in time. I am searching for rationales for the correction of NIFTY to the level of 15000. I am in searching expecting the scam to burst before the 18^th Loksabha Election and the Indian economy to get fort tailspin. I am searching for the banking crisis, a high level of NPA and falling confidence in the global market.

These are the wishes of the PUT option holders, the bear favouring market players and most importantly those who have lived life in a market filled with all sorts of slow and corruption.  But before delving further I would accentuate the global crisis which is brewing like a filter coffee taking a long time to get launched in the market.

If we want to know where India, U.S. and China stand we need to know the respective key aspect of fund inflow and outflow which decides the Nifty fate of 30000 or 40000. I am not repeating the same demographic change and opportunities for the Indian capital market. I am discussing the slowdown opportunities of the US and China where India is placed and its investments. 

The US Slow Poison Fall 

The S&P 500 is already up 5.4% on the year, well above the 1.9% average gain Wall Street strategists were predicting for all of 2024. 2024 has been the best start of the year for momentum factor since 2008,  IShares MSCI World Momentum has gained 14% ytd vs 6% for iShares Core MSCI World. Momentum factor has also outperformed on Wall St. iShares MSCI USA Momentum has gained 14% vs iShares Core S&P 500's 5.5%.

On the other hand, the wall Street have narrowed down. Those who are thinking soft landing for the U.S economy as the stock market index is at a time high well it is a gimmick to be believed in. More than 70% of the S&P 500 stocks have underperformed in 2023. It is not a soft landing but a crash landing in the form of slow poisoning.

Magnificient Bubble.

Those who are in search of the bubble in the Indian market and investing with huge trust in the International market well the bubble dream is true but the country's name is changed.

The FANG name now has changed into magnificent 7.  Magnificent 7 market cap nears $13 trillion. These seven tech giants of the other big name Magnificent 7 alone represent 30% of the S&P 500. Currently, the Magnificent Seven's market value is almost half as large as the remaining 493 S&P 500 companies combined.

 If we take a quick look towards the returns made by these 7 we find

Magnificent 7 Total Returns, 2022-24...

• ·         Nvidia $NVDA: +125%
• ·         Meta $META: +41%
• ·         Microsoft $MSFT: +25%
• ·         S&P 500 $SPY: +7%
• ·         Apple $AAPL: +6%
• ·         Amazon $AMZN: +3%
• ·         Google $GOOGL: -2%
• ·         Tesla $TSLA: -47%

 

The remaining 70% of the S&P 500 companies are underperformed.

 The employment numbers of the US are also fake since they report underemployment figures.  it is not clear that the new jobs in question are well-paying sustainable jobs that meet the cost of living across the US.  Child poverty is up %, in the U.S. and average rent prices have surged nationally. According to a report by the Federal Reserve Bank of New York, the number of those underemployed is much higher – 33 per cent among college graduates. 

 The National Federation of Independent Business (NFIB) small business hiring plans index declined from 16% in December to 14% in January.  The fall of the economy and market began for the U.S. but under a sugar-coated number of S&P 500 and employment data.

The CHINA Outflow 

 Now China have been in a lot of messy phases since the pandemic and the journey seems to be never-ending. There is a massive shift being witnessed towards shifting investment allocation from China to India. For example, the US equity funds reduced stock exposure to 1.38% from 2.17% over 3 years.  The outflow of funds continues despite China's inclusion in the $1.2T JP Morgan EMBI bond index, its global FX reserve share dips to a 4-year low at 2.37%. Investors retreat, with Chinese debt seeing 7 months of outflows, while EM ex-China debt attracts significant inflows. They are aggressively waiting for India to be included in the JP Morgan Bond Index.

India In Every Global Investor Portfolio & Products 

 The shift to India is already being reflected and this will be a long-term shift compared to what we have witnessed historically. Evidence of this monumental shift can be seen in the actions of major hedge funds, like Marshall Wace ($62 billion) positioning India as its largest net long bet outside the US.  On the other hand, Zurich-based Vontobel Holding AG made India its top emerging market holding. This is a clear vote of confidence in India's growth trajectory compared to China.

Global giants like Goldman Sachs & Morgan Stanley are leading the charge, signalling a strong endorsement of India's economy, and asking their investors to add India to their portfolios.  This pivot reflects a strategic reassessment of growth potential in emerging markets. If we look at the global ETF market, we find that the evaluation of investment strategies towards India has become more aggressive. US ETFs focused on  India experiencing record inflows, while funds dedicated to China see outflows.  This speaks loudly that investors have started accepting Indian growth in their portfolios. 

ETF flows are changing the direction. As China AMC suspends purchases of Nasdaq 100 ETF and S&P 500 ETF the doors for Indian markets open up. Very soon Indian investors will be able to invest in these funds ( regulatory changes will take place) and simultaneously flows from these countries will come to Indian markets. Long-term investments are getting out of China which is a major economic event.  Between September 2023 & January 2024, a net outflow of more than $140 billion of long-term investment had left. Emerging markets excluding China are getting huge inflows through ETFs. emerging market securities attracted $35.7 bn in January -- the third consecutive month of overall inflows to EM, explained mainly by strong debt issuance.

Japanese investors are also diversifying aggressively towards India. Thanks to the strategic tie-ups of India with Russia and Japan followed by other countries who are now adding India to their investment portfolio.

So Indian markets are well placed to get huge inflows in 2024 and onwards. Those who were thinking that the Indian market would fall Indian investors would cry and there would be a recession in India and expecting NIFTY to be around 15000 levels well very sorry to disappoint the PUT option holders. 

Pull Up Socks - Indian Financial Advisors

U.S. boutique bank Lazard or European peer Rothschild or UBS all are shutting down their offices in China and moving out investments. These big giants are looking towards India and hence you will find significant pay raises and job growth. Indian financial market is just poised for a huge turnaround where new products investment options and strategies will come.  If the NIFTY become 50000 or 70000 by 2030 then don’t expect that Indian investment options will remain the same. New doors new opportunities and global product options will come up which will create a new world of Investment products.  The IFA community and financial advisory platforms the so-called RIA models are yet to explore and grow. The Indian financial market needs quality RIA’s and IFAs who will guide and navigate these new products as NIFTY grows to 50000 levels or 70000 or 100000 mark.