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Postcard from India



A visit to India is always rich fodder for the senses as the world’s second most populous country is often an overwhelming theatre of organised chaos. The country, in many ways, remains the archetypical emerging market: fundamentally poor and with many shortcomings, but also dynamic and continuously forward-moving – if rarely in a straight line. The obvious comparison to China always comes up, but ultimately remains largely irrelevant. Although both countries contain large populations – China with 1.39 billion and India with 1.34 billion1, by virtue of their domestic economic sizes, India is at a different stage of development and following a separate script for development.

Members of Comgest’s team combined the two commercial cities of Bengaluru and Mumbai during a recent research trip, which in our view reinforced the general enthusiasm held by foreign investors – that things in India are progressing. From high-end office complexes and Uber rides to new airports, India is clearly on the move. However, our trip also left us a bit cautious that the next year or two may prove to be less accommodating than many currently expect notwithstanding, in our opinion, India’s positive long-term prospects. Should this be the way things unfold, it would be completely consistent with the history of the country’s economy and financial markets.

In recent years, the Indian stock market has performed well. During the 24 months preceding the end of 2018, the MSCI India index delivered local currency returns above those of the overall emerging markets, the global equity markets and even the mighty US market – including when adjusted for the depreciating Rupee. To some extent this outperformance has perplexed us because it has not been accompanied by comparable earnings per share (EPS) growth at a market-level, but instead has been substantially driven by multiple expansion.

In our view, the local investment community holds the key to the country’s stock market performance. 

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This communication has not been updated since publication. The views expressed are valid at the time of publication only and may not reflect current thinking.

1Data as of 2017 from The World Bank Group, China ( and India (, 04-Mar-2019.



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