India’s Equity Market: A Strong 2023


The Indian equities market had a remarkable performance in 2023, with investors making bullish bets and enjoying significant gains. GQG Partners, a leading asset manager with $120.6 billion under management, believes that there are still more opportunities for substantial returns in the market.


GQG views India as one of its top emerging-market bets and expects the country to unlock further opportunities through its efforts to upgrade and expand its infrastructure. While China has been a dominant manufacturing leader in the region, India aims to challenge that dominance by becoming an attractive destination for businesses seeking to diversify their supply chains.


According to World Bank data, manufacturing accounted for only 13% of India’s gross domestic product in 2022, which is less than half the proportion in China. To attract more foreign companies and promote industrial diversification away from China, India must enhance its infrastructure. However, high government debt presents a constraint on its ability to invest in improvements.



Kersmanc believes that India is opening up at the right time, offering high-quality, long-duration stable earnings and cash flow businesses. In contrast, the opportunity is not as evident in China, where the market is maturing and experiencing lower growth rates.


Other investors share GQG’s optimism about the Indian market. The benchmark Sensex index staged an impressive rally throughout 2023, reaching a new record close by the end of the year with gains of 19%. However, stocks have experienced a pullback in 2024, erasing 1.6% of the previous year’s gains.

GQG’s Emerging-Markets Strategy: India’s Dominance

India has become a crucial player in GQG’s emerging-markets strategy. Currently, it accounts for nearly 37% of the investment manager’s exposure in emerging markets, which is more than double its weight in the MSCI Emerging Markets index. In contrast, GQG’s stake in China only represented 6.9% of its total exposure at the end of last year.

Among GQG’s top 10 holdings in emerging markets, Indian companies like ITC and Adani Enterprises feature prominently. The fund manager also possesses shares in various sectors, including consumer staples, industrials, utilities, materials, and financials.

Notably, India holds significance across GQG’s other funds as well. It stands as the second-largest exposure in both GQG’s international strategy and global strategies, with weightings of 16.0% and 9.0%, respectively, as of December. In contrast, China did not make it to the top 10 in either strategy.

In a research note released last year, GQG elaborated on its bullish stance on India. The investment firm expressed disappointment in the policies imposed by developed nations such as the US and Europe, regulatory crackdowns in China, and nationalization in France. In contrast, GQG believes that India stands out due to its pro-business approach.

Apart from India, GQG also identifies “more interesting” opportunities in Brazil compared to China within the emerging markets. According to Kersmanc, GQG has been bullish on Brazil in the EM space for some time.

Financial companies in emerging markets continue to pique GQG’s interest due to their ability to handle inflation and higher interest rates effectively. Kersmanc notes that these companies are accustomed to operating in such environments. He highlights the strong loan growth in India, as more individuals join the formalized banking system.

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