India's Soaring Stock Market Attracts Billions, But Faces Risks from High Valuations and Upcoming Elections
• India's stock market is attracting billions in domestic and foreign investment as a fast-growing alternative to China, overlooking risks like high valuations and upcoming elections.
• The benchmark Nifty 50 index has risen 30% in 10 months thanks to strong retail and institutional inflows, with $20 billion in foreign money in 2023.
• Investors are attracted by India's economic growth prospects and expectations that PM Modi will win a rare third term, despite lofty valuations and political uncertainty.
• China's efforts to stabilize its economy have had little impact so far, but a rebound there could shift attention and flows away from India.
• India's May elections pose low probability but high impact risk if Modi's party underperforms, dampening economic reform momentum.