{"id":105005,"date":"2017-04-20T10:09:55","date_gmt":"2017-04-20T14:09:55","guid":{"rendered":"http:\/\/countingpips.com\/?p=105005"},"modified":"2017-04-20T06:10:48","modified_gmt":"2017-04-20T10:10:48","slug":"indias-1-8-trillion-gold-mine","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2017\/04\/indias-1-8-trillion-gold-mine\/","title":{"rendered":"India\u2019s $1.8 Trillion Gold Mine"},"content":{"rendered":"
April 20, 2017<\/div>
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By WallStreetDaily.com<\/u><\/a> \"India\u2019s<\/p>\n

\"LouisAs longtime readers know, we love small caps here at Wall Street Daily<\/em> \u2014 with good reason.<\/p>\n

During periods of economic expansion, small stocks often outperform blue chips by a wide margin.<\/p>\n

In fact, on swelling hopes of prosperity under President Trump, the market\u2019s smallest stocks have gained 14% since the election \u2014 compared with a 9% gain of the S&P500.<\/p>\n

However, things have been easier said than done in the White House. As a result, the stock rally has been put on hold for the time being \u2014 at least here in the United States.<\/p>\n

But as senior analyst Jonathan Rodriguez explains below, now is the perfect time to load up on small caps abroad\u2026<\/p>

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<\/div>\n

Ahead of the tape,<\/p>\n

Louis Basenese
\nChief Investment Strategist, Wall Street Daily<\/em><\/p>\n

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A $1.8 Trillion Market Awaits<\/h2>\n

\"JonathanAfter years of underperformance thanks to a strong U.S. dollar, emerging markets have roared back to life.<\/p>\n

Since bottoming out in early 2016, the MSCI Emerging Markets index has gained 39%, versus a 28% rise in U.S. equities.<\/p>\n

Buoyed by rising commodities prices as well as inflation, emerging markets have a whole lot of room to grow, too.<\/p>\n

And one country stands above the rest\u2026<\/p>\n

I\u2019m talking about India, one of the fastest-growing emerging markets in the world.<\/p>\n

Fueled by increased public spending and big gains in the country\u2019s mining industry, India\u2019s GDP has grown by more than 7% year over year in the last four quarters.<\/p>\n

That\u2019s nearly nine times higher than U.S. GDP, which averaged just 1.7% annually over the same period.<\/p>\n

Of course, the effects of demonetization \u2014 or the removal of physical cash from circulation \u2014 could result in a downward revision of up to 1%.<\/p>\n

But growth remains much stronger in India than here in the States \u2014 and Indian stocks have soared over U.S. stocks as a result.<\/p>\n

The total Indian equities market is now worth $1.8 trillion.<\/p>\n

Granted, the postelection \u201cTrump\u201d rally has favored domestic small caps. But a weakening dollar and fading prospects of sweeping economic changes have investors hitting the \u201cpause\u201d button on the upswing.<\/p>\n

On the other hand, India has logged inflows of more than $8 billion into the country\u2019s equities and bonds, according to Deutsche Bank.<\/p>\n

In the last three months, the iShares MSCI India ETF (INDA) has gained 15% \u2014 twice the rise of the Emerging Markets index and five times the gain of U.S. equities.<\/p>\n

And the pop for small caps was even greater\u2026<\/p>\n

Go Small or Go Home<\/h2>\n

SMIN, the iShares exchange-traded fund that tracks Indian small caps, has risen 32% since the start of the year.<\/p>\n

That\u2019s a whopping seven<\/em> times the growth of U.S. small caps over the same period.<\/p>\n

And despite the huge rally, Indian small caps trade at just 20 times forward earnings \u2014 a 25% discount to their American counterparts.<\/p>\n

They also trade at a 30% discount to their five-year trailing earnings multiple.<\/p>\n

Of course, led by the United States, the threat of protectionism looms overhead.<\/p>\n

But if Trump\u2019s trade reform stumbles in Congress like health care did, emerging markets like India will continue to absorb heavy inflows on a weaker dollar and stronger growth prospects.<\/p>\n

Better still, even if protectionism takes hold here in the States, SMIN is weighted toward the consumer discretionary and financial sectors \u2014 which rely on domestic revenues, as opposed to foreign sales.<\/p>\n

And Indian equities typically serve as a defensive market within the EM space. This means in a downturn, Indian stocks often outperform broader emerging markets.<\/p>\n

In other words, this ETF is perfectly suited for investors looking to catch the next leg up of the explosive India stock rally or hedge against broad EM weakness.<\/p>\n

Bottom line: The rally in small caps may have stalled in the United States, but Indian small caps \u2014 which trade at a remarkable discount \u2014 are soaring. And SMIN provides investors with the best, most diversified exposure to this booming market.<\/p>\n

On the hunt,<\/p>\n

Jonathan Rodriguez
\nSenior Analyst, Wall Street Daily <\/em><\/p>\n

The post India\u2019s $1.8 Trillion Gold Mine<\/a> appeared first on Wall Street Daily<\/a>.<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

By WallStreetDaily.com As longtime readers know, we love small caps here at Wall Street Daily \u2014 with good reason. During periods of economic expansion, small stocks often outperform blue chips by a wide margin. In fact, on swelling hopes of prosperity under President Trump, the market\u2019s smallest stocks have gained 14% since the election \u2014 […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-105005","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/105005","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=105005"}],"version-history":[{"count":2,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/105005\/revisions"}],"predecessor-version":[{"id":105015,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/105005\/revisions\/105015"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=105005"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=105005"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=105005"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}