Increasing investments in infrastructure, favourable demographics and progress in economic reforms could help Indian stock market investors get higher returns over the long term, an investment management firm said today.
"The country appears poised for a rebound. Considering the government's agenda for reform, Indian equities have become increasingly attractive for the long-term investor," Boston Company Asset Management said in a report here.
India's large young population, which should support long-term consumer demand and overall economic expansion, its expertise in business services, software and generic-pharma development make it a global outsourcing centre, it said.
The country's diversified, liquid equity market provides more opportunity for overseas investors to buy local stocks, the firm maintained.
"Most importantly, India boasts of a large working-age population that will drive expansion through personal consumption. Unlike China and many developed nations, India is not grappling with an ageing population that will need substantial societal support."
Other potential drivers that could help Asia's third-largest economy to expand are urbanisation, which could significantly boost housing and transportation, improving rural wages, cooperation among parties in the coalition government to pass reforms and potential trade agreements to improve exports, the report noted.
However, factors that could drive the country's growth have been overshadowed by investor concerns over negative issues such as a fragmented government, widening current account and fiscal deficit, power shortage, poor roads and deteriorating margins in many business sectors, it said.