Newspaper headlines spew doom and gloom about India. Analysts are topping each other with ever-more-dire pronouncements on the country’s prospects. And yet some foreign investors are not only ignoring the warnings, they are buying more shares.
It flies in the face of conventional wisdom to bet on a country with a currency tumbling to record lows and a government that is clutching at straws to deal with India’s worst economic turmoil since its balance of payment crisis in 1991.
Yet to some financial firms such as Ashmore Group in London the panic gripping India ignores an economy that, although slowing sharply, is far from collapse.
So much hand-wringing over the state of the economy today masks the long-term compelling play that attracted many foreign investors to India in the first place, including a young, urbanising population that will drive consumer demand and an economy that is increasingly diversifying into exports.
“The market is obviously currently gripped in a sense of panic and, as such, it is not paying a lot of attention to the underlying fundamentals,” said Jan Dehn, head of research at Ashmore Group in London, which manages $80 billion worldwide.