India’s economy was affected by the COVID-19 pandemic. But could the impact of vaccines – combined with the country’s growth engines – boost exchange-traded funds focused on India in 2021?
India has been hit hard by the pandemic, with more than 10 million cases. Its economy suffered in 2020; in a January 2021 note, IHS Markit estimated that gross domestic product in fiscal 2020-21, which ends on March 31, would fall 8.9% compared to the previous year.
However, there may be positive signs for the future. The company has seen a recovery in economic activity since September and expects GDP growth to recover by 8.9% in fiscal year 2021-22. Meanwhile, on February 1, the government announced an increase in infrastructure spending in its budget, which analysts believe can also support growth.
India’s recovery was led by high-quality, highly capitalized companies, particularly those in technology, energy and health, says Rene Reyna, chief strategist for thematic and specialty products at Invesco ETFs & Indexed Strategies. The company operates Invesco India ETF PIN,
a $ 107.2 million fund that had returns of 18.5% in 2020 and has fallen about 2% so far this year, through January 29. Reyna says India’s large information technology sector was a particular driver of the recovery, “benefiting from aggressive work at home efforts. “
An expanded version of this report appears on WSJ.com.
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