Reviewed by Aug 26, 2020| Updated on
What is an India ETF?
India Equity-Traded Funds (ETFs) are intended to monitor the output of assets listed on an Indian stock exchange. The nation currently holds about ten different exchanges with India's National Stock Exchange (NSE) being the most common. The NSE offers links to India's most widely traded stocks, and various indexes, such as the NIFTY 50.
An India ETF may monitor the output of a global index, sector category, or various capsizes. Through a diversified asset, this gives investors broad exposure to the burgeoning Indian economy.
Break Down of India ETF
As economic growth continues to outpace most countries around the world, India's ETFs have become a promising investment. India is particularly skilled in knowledge-based jobs, such as information technology, finance, and healthcare.
Focusing on these sectors could lead to greater advantages for companies that operate in a technical capacity. In particular, analysts expect that India's stock market will experience significant growth in the technology sector as mass digitisation continues to be emphasised by the government.
However, greater acceptance of electronic payment systems, growth of middle-income communities, and more consumer spending promise to boost economic growth and the stock market by extension is expected.
India is now one of the most promising economies after reporting multiple years of high single-digit growth. The political, consumer discretionary, and technology sectors are expected to achieve above-average returns over the next decade.
Risks Associated With India ETF
The Indian economy and stock market deliver substantial growth potential to investors, but there are still some important risks. The government continues to push demonetisation efforts, introduce a tax on goods and services, and deleverage companies, each of which may cause a slowdown. Nevertheless, India is facing an uphill struggle in its transition from a developing market to a developed economy.
The country needs to boost the economy, but foreign policy, international affairs, human rights and basic services must also change. Failure to address each segment can result in foreign investor withdrawal, a slowdown in economic growth and stock market downturns.