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India’s trajectory

In its own orbit

India has had an impressive run in recent years. There’s plenty more to go. Its economy, now the world’s fifth biggest, is on track to become the third largest by 2027, and India has the world’s largest youth population, with a median age of just 28. Moreover, annual per capita spending is only USD620, one-eighth of where China is today, making India one of the most promising consumption stories globally.

Annualised GDP growth forecast for India over the next five years (versus 5.7% over the past 10 years)
The portion of market cap in India that the top 5% of companies constitute

Much of what makes India so compelling boils down to four investment themes:

  • The middle class is growing rapidly, increasing demand for everything from household items such as air conditioners to expensive jewellery and big-ticket items like cars.
  • Just 10% of household financial assets are in equity or fund products, but this is changing fast and boosting demand for mutual funds and other financial products.
  • Private capex has been weak, and corporates have been deleveraging for a few years now. A stable government next year could finally spur more private investment.
  • The government is rolling out a number of initiatives and reforms to support manufacturing at home, accelerate exports, and boost capex and consumer spending.

Another attraction is that India is like no other country. For instance, two-thirds of the population live rurally and aren’t easy to reach. As a result, companies with a distribution network that stretches into the villages have a huge advantage that is difficult to emulate. They generate superior and sustainably high returns on capital, unmatched by any other country in the region. Families are large, leaving less money to spend on discretionary items, but that puts a big focus on fast-moving consumer goods.

Put this all together, and it’s no surprise to find the Indian equity market has emerged as one of the best-performing markets in Asia – and across all emerging markets – over the past two decades, garnering ever-growing interest from domestic and foreign investors.

In the full report, we provide an overview of the equity market and discuss the long-term outlook for most of the large listed sectors in India. We also dive into the economy and the FX and credit markets. This report is relevant for seasoned investors and as well as those looking at India for the first time. HSBC covers 136 stocks across 15 sectors, with a collective team research experience of more than 180 years.

Facts and figures

India has the world’s largest youth population, with 254m people aged 15-24 and a median age of c27 years. That compares with China’s median age of c38 and youth population of 161m.


Total market cap of India’s equity market, which is the world’s fifth largest


India is the world’s fourth-largest producer of agrochemicals after the US, Japan, and China


Per capita annual retail spend in India (one-eighth that in China)


The size of India’s bond market


Annual Indian IT exports

Indian IT remains the backbone of white-collar job creation in India, employing more than 5m people directly and 1.5m indirectly. We expect revenue in the IT industry to continue to grow at a 7-8% CAGR in the coming years.

The value of India’s auto industry, though electrification has so far been slow
of India’s equity market is still owned by promoters (founders)

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