India is, the last week notwithstanding, a much-loved market. It’s got performance (up 19 per cent year-to-date), potential (7-9 per cent GDP growth) and popularity. That said, its got pushbacks too—high valuations, and more recently, faltering growth. We argue the love for Indian equities will only grow and its valuations will stay high (16-20 times band) over the next three years—as big fundamental transitions play through and pent-up cyclical drivers kick in. It has its challenges—near term growth, job creation and modest investments, but upsides trample some of what is coming its way.
A fundamental transition. . .
We see
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