India Emerges as Top Beneficiary in Emerging Markets Amid US Economic Policy Changes
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Synopsis
With the US changing its economic policy, India is projected to benefit significantly from a surge in foreign institutional investor inflows, positioning it favorably among emerging markets, as indicated in a recent report.
Key Takeaways
- India is set to gain from US economic policy shifts.
- Strong FII inflows are returning to Indian markets.
- Investors are advised to focus on domestic sectors.
- The correction in SMID stocks signals growth potential.
- Global capital is shifting toward non-dollar assets.
Mumbai, March 26 (NationPress) As the United States alters its economic policy, emerging markets are set for a substantial upswing, with India expected to emerge as the primary beneficiary due to a resurgence of robust foreign institutional investor (FII) inflows into its markets, a recent report highlighted on Wednesday.
The global economic landscape is experiencing a significant transformation, driven by the changing fiscal and monetary strategies of the current US administration.
This shift is set to redefine investment opportunities, compelling investors to adeptly maneuver through the evolving climate with strategic insight,” stated Emkay Global Financial Services in its ‘India Strategy Report’.
As funds transition from dollar-denominated assets, India’s solid economic underpinnings, favorable policy framework, and attractive market valuations position it as a leading recipient of global capital, the report emphasized.
India’s markets are primed to extend their 4.5 percent rally, buoyed by considerable foreign institutional investor (FII) inflows.
“India is on track to gain immensely from this global economic transition. A depreciated dollar and decreasing US bond yields are projected to enhance foreign institutional investor (FII) inflows into Indian equities,” the report elaborated.
Furthermore, India showcases resilience backed by strong fiscal and monetary support, making it a compelling destination for investments.
Emkay predicts a sustained surge in Indian markets as global capital gravitates towards non-dollar assets.
“Investors are encouraged to concentrate on the domestic consumption, investment, and capital goods sectors while minimizing their exposure to businesses dependent on US markets,” the report advised.
Financial institutions and NBFCs are anticipated to spearhead this rally. The correction phase in Small and Mid-cap (SMID) stocks seems to have concluded, indicating further potential for growth. Domestic discretionary spending and capital investments are expected to witness robust expansion.
The Trump administration is undergoing a strategic economic policy transition, shifting from a “loose fiscal and tight monetary policy” to a “tight fiscal and loose monetary policy” framework.
This adjustment aims to rectify macroeconomic disparities and reaffirm US supremacy in global GDP (24 percent), market capitalization (70 percent), and its status as a reserve currency. The administration’s method includes fiscal tightening, tariff increases, and strategic economic repositioning, setting the US on a path for long-term sustainability, according to the report.
“As the US fine-tunes its economic approach, India is positioned to draw significant foreign investment, benefiting from a weaker dollar and reduced bond yields,” it added.
