Should You Buy India ETFs After Modi's Re-Election?

In this episode of ETF Spotlight, I speak with Gaurav Sinha, Associate Director at WisdomTree. We talk about investing in India after Narendra Modi’s re-election.

Modi led his party to a landslide victory in the world’s largest election with close to 900 million eligible voters. The BJP won 303 of India’s 543 parliamentary seats, 21 more than it did in 2014.

We first take a look at Modi’s achievements in the past five years. The economy grew at an average rate of more than 7% annually. His boldest move was demonetization, which resulted in cancellation of about 86% of the currency in circulation.

Other major economic reforms included an overhaul of the tax system and implementation of a new bankruptcy law.

Should we expect some big-bang reforms during Modi’s second term?

India’s economic growth has slowed in recent months. The economy expanded 5.8% in the first quarter, and as a result, the country lost its title as the fastest growing major economy in the world.

The central bank cut its key lending rate for the third time this year as it seeks to put the economy back on track. What lies ahead?

US tech giants have been investing in India as it is very important for their global growth ambitions. Hundreds of millions of Indians have access to the internet now with cheap smartphones and data plans.

But recently the government changed e-commerce rules, which impacted Amazon (AMZN - Free Report) and Walmart (WMT - Free Report) owned-Flipkart. Alphabet’s Google (GOOG - Free Report) is being investigated for abuse of its Android platform.

 Will the US tech giants face greater regulation in India now?

India ETFs have significantly outperformed the broader EM indexes over the past five years and this year as well. Mark Mobius, emerging markets guru, says India is the best EM right now.

Investors like political continuity and business-friendly reforms. Should you buy India ETFs now? Find out on the podcast.

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