Although the Indian stock market experienced a big wobble last month, investment companies still believe the case for investing in the world’s most populated country remains as robust as ever.
The correction, which saw equity prices slide by nearly six per cent on June 4, was triggered by the surprise outcome of India’s general election – requiring Prime Minister Narendra Modi and his Bharatiya Janata Party (BJP) to form a coalition government.
Most political commentators had thought the BJP would sail through the election, securing its third term in office since 2014.
Yet, a settling of the dust has resulted in Indian equity prices resuming their upward path with most financial experts believing Modi will continue with policies aimed at growing the economy.
Michael Langham, economist at investment house abrdn, is among them.
He says the Budget later this month should ‘reaffirm’ the Prime Minister’s focus on ‘manufacturing and infrastructure development’.
It’s a view that Ayush Abhijeet, investment director at Singapore based Whiteoak Capital Partners, shares.
He says: ‘Most of the economic reform agenda that Modi has overseen in the past ten years will continue.
‘That means better infrastructure, greater defence spending, improved utilities and the development of a competitive manufacturing base.’
Whiteoak is a specialist in managing portfolios investing in emerging markets and in particular India.
In total, it has assets of £5.5billion under its wing.
Among its array of funds is UK listed investment trust Ashoka India Equity. Over the past year, it has delivered shareholders a return of 40 per cent.
Over the past five years, the £433million fund has generated a return of 160 per cent. Other Indian investment trusts include abrdn New India, India Capital Growth (run by asset manager AssetCo) and JPMorgan Indian.
The Ashoka fund has the best five-year record. Abhijeet says Ashoka India Equity managers try not to be distracted by politics.
‘The main focus is always on finding great businesses – companies which have scaleability and are run by exceptional management teams,’ he says.
‘Once we have identified these businesses, we like to buy into them at attractive prices. If we get those two key ingredients correct – quality and price – then we have a potential recipe for investment success.’
Among the trust’s big gest stakes are holdings in bank ICICI and food delivery company Zomato.
‘We first bought into ICICI in March 2020,’ says Abhijeet.
‘It has steadily been taking market share from some of the public sector banks.’ Food delivery company Zomato, he says, has benefited from its focus on quick-commerce – getting items to customers’ doors within 10 to 15 minutes.
Whiteoak’s focus on identifying great businesses means a big commitment to research with some 25 analysts hunting down investable companies. ‘It’s not just about meeting the managers,’ says Abhijeet.
‘It’s also about talking to suppliers, distributors and former employees. It’s what we call 360 degrees research.’
Ashoka India Equity’s stock market identification code is BF50VS4. Its ticker is AIE.
Annual charges are 1.64 per cent and the trust does not pay shareholders a dividend.
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