Indian equities have surged 28% in 2014 on optimism about the new prime minister's plans to bolster business and investor confidence.
Outlook positive: Narendra Modi's initiatives include tax and regulatory reform, infrastructure investments and a push for more industrial manufacturing in the country. Equities have responded. In the short run, valuation metrics appear mixed as the MSCI India index is in line with its long-run price-to-book ratio, while its price-to-forward-earnings ratio is higher than average.
Index buster: Over the long term, India has exhibited outperformance over the broader emerging markets index.
BlackRock is bullish: Despite its 39th-place ranking in BlackRock's 50-country Sovereign Risk index, the firm says India's metrics have shown improvement and are expected to strengthen further in the next two years.
Sources: Bloomberg LP; BlackRock
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