Invesco’s Commentary: India Equities’ outlook after Election

Investment implications

• While the victory of Modi is narrower than expected, their ruling party is still in the majority, therefore the ongoing economic reform and policies shall continue.
• We anticipated policy continuity in India, as evidenced by the Prime Minister's post-election speech, where he reaffirmed the government's commitment to support the electronic manufacturing, semiconductor, defense, green energy, EV, and digitization sectors, coupled with efforts to make India the third-largest economy in the world.
• Fundamentally, India remains in good shape, with positive high-frequency data and an estimated GDP growth of 8.2% for FY24.
• It is crucial to continue focusing on our bottom-up, fundamentally driven stock selection approach, as this is much more important in the current market environment.

Investment themes – India’s multi-year secular growth

• Witnessing an inflection point for discretionary consumption in India, as the middle class expands and their purchasing power increases.
• India is poised for a consumption explosion, supported by a rising population and growing GDP per capita.
• Domestic-oriented sectors like transportation, hotels, jewelry, and automotive are expected to benefit from the rising incomes of Indian consumers.

• The government's commitment to attracting investments and promoting domestic manufacturing, exemplified by initiatives like Make in India and Production-linked Incentives schemes, further solidifies the positive outlook for India's manufacturing sector.
• India has successfully cultivated a manufacturing renaissance, positioning itself as a key global partner and benefiting from worldwide supply chain relocation.
• Global dynamics have encouraged multinational companies to expand production and establish factories within India, further bolstering the country's manufacturing capabilities.

• India's financial transformation, fueled by increasing digitalization, presents significant growth opportunities for the country.
• As more individuals gain access to digital services and financial inclusion expands, it paves the way for enhanced economic participation and consumption.
• The rise of e-payment systems, retail credit, and global business services hubs have been tangible manifestations of this financial transformation.
• The continued advancement of India's digital financial infrastructure will pave the way for even greater growth within the financial services industry.