The Indian stock market has outperformed the wider emerging markets space so far in 2022, just as it did in 2021.

While this follows on from a period of underperformance, on a long-term view, the showing of Indian stocks compares favourably with both the developed and developing world.

According to data from MSCI, over three years its Indian index has delivered an annualised return of 18.3%, over five years 12.4% and over 10 years 13.2%. The comparable figures for the wider emerging markets index are 5.7%, 6.9% and 8.9% respectively.

The MSCI World developed markets index, despite being dominated by what has been a buoyant US market over the last decade, has also not kept pace with India. Over three years its annualised return is 10.1%, on a five-year view 9.4% and over 10 years 10.8%.

The removal of some of the bureaucracy which has plagued the Indian economy seems to be helping, and big tech consultancies like Infosys and Tata Consultancy Services are seeing buoyant demand thanks to a post-pandemic digitisation drive.

While inflationary pressures, particularly rising commodity prices, are an issue for India, the latest economic outlook from the International Monetary Fund still expects 7.4% growth in 2022 and 6.1% in 2021.

Longer term the country is expected to benefit from favourable demographics with a large working age population.

This outlook is part of a series being sponsored by Templeton Emerging Markets Investment Trust. For more information on the trust, visit here.

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