India is now the world's fastest-growing major economy, making it an ideal place to look for stocks to buy now as U.S. multinational companies seek to take advantage of the explosive economic growth there.
According to the International Monetary Fund (IMF), India's gross national product is expected to grow at a rate of 7.3% in 2015-2016, easily beating China's expected GDP growth of 6.8%.
Next year, the IMF sees the gap widening, with India's GDP growth reaching 7.5% and China's shrinking to 6.3%.
So while China's economy is five times the size of India's, the India growth story is getting much more compelling.
One big reason India is looking more attractive to U.S. companies is the growth of the middle class there. Ernst & Young project that the middle-class population of India will grow from 50 million today, or about 5% of the total, to 200 million in five years. And by 2030, India's middle class will swell to 475 million.
Of all the economies from the once-touted "BRIC" group (Brazil, Russia, India, China), India's is now the strongest.
The chief catalyst behind India's sudden rise to the top is Prime Minister Narenda Modi, who was elected in May 2014.
How Prime Minister Modi Has Made Investing in India Attractive
Modi has tamed inflation (down to 5% from 9%), trimmed bureaucracy, and cut regulations. He's also traveled the world making the case for investing in India.
"In late September, Modi spoke to a gathering of tech executives in Silicon Valley, becoming the firm Indian prime minister to speak in the U.S. in more than three decades," said Money Morning Defense & Tech Specialist Michael A. Robinson. "He invited more tech investments in India and touted a program that seeks to ensure government services are made available to citizens electronically by improving online infrastructure and by increasing Internet connectivity."
Modi's reforms and initiatives have energized India's economy and have U.S. companies lining up to make the most out of the country's growing contingent of consumers.
Here's a look at some stocks to buy now to profit from this trend...
[mmpazkzone name="in-story" network="9794" site="307044" id="137008" type="4"]
Stocks to Buy Now to Benefit from India's Growth
One of the sectors taking the biggest interest in India is tech, and Modi's visit to Silicon Valley showed that tech investing is a priority for him.
Major U.S. tech companies that pledged to invest in India at the September meeting include Microsoft Corp. (Nasdaq: MSFT), Alphabet Inc. (formerly Google Inc.) (Nasdaq: GOOGL, GOOG), Cisco Inc. (Nasdaq: CSCO), and chipmaker Qualcomm Inc. (Nasdaq: QCOM).
Some tech companies already have initiated projects in India. Microsoft CEO Satya Nadella, himself a native of India, visited the country earlier this month to announce a program that will provide credits for Azure cloud services to Indian startups.
Apple Inc. (Nasdaq: AAPL) has partnered with an electronics chain in India, Croma, to create a "store-within-a-store" format to sell Apple products. Apple has also set up 130 corporate resellers, with the goal of having 200 by next March, to sell to enterprise customers in India.
But tech is not the only sector with stocks to buy now to profit from India.
"India Stocks" to Buy Now Range Across Many Sectors
The healthcare sector, for example, is expected to grow from $75 billion in 2012-2013 to $300 billion by 2020. Medical devices manufacturer Becton, Dickinson and Co. (NYSE: BDX) has a wholly owned subsidiary in India poised to take advantage of this growth.
The insurance industry is also broadening investment in India, although Indian law requires they do so through partnerships. Over the next decade, the insurance market in India is expected to quadruple from $60 billion to $240 billion. Life insurance alone is expected to exceed $160 billion.
Three stocks to buy from the U.S. insurance industry are Allstate Corp. (NYSE: ALL), Metlife Inc. (NYSE: MET), and American International Group Inc. (NYSE: AIG). Both Metlife and AIG have joint ventures in India currently. Allstate announced last year plans to invest $1 billion in its India operation.
Frankly, the opportunities for stocks to buy cross many sectors and feature a lot of big names.
Boeing Co. (NYSE: BA) this month landed an $8 billion contract from Indian airline Jet Airways. General Electric Co. (NYSE: GE) just won a $2.6 billion contract with the state-owned railway to supply 1,000 diesel locomotives to be built in India. For Domino's Pizza Inc. (NYSE: DPZ), India is its second-biggest market. The company plans to expand its restaurants there from just over 800 this year to 2,000 by 2020.
And the stocks to buy aren't limited to U.S. companies, either. Two Indian companies in strong positions to benefit from their nation's economic growth trade on the New York Stock Exchange. They are Tata Motors Ltd. (NYSE ADR: TTM) and information technology company Infosys Ltd. (NYSE ADR: INFY).
Follow me on Twitter @DavidGZeiler or like Money Morning on Facebook.
Catching the Commodities Rebound: Most investors have given up on commodities by now. Since 2011, the CoreCommodity CRB Index has plunged 48%. But since commodities are cyclical, they have to bounce back at some point. Here's how to know when a recovery in commodities is imminent...
About the Author
David Zeiler, Associate Editor for Money Morning at Money Map Press, has been a journalist for more than 35 years, including 18 spent at The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.
Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving at Money Morning in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple for The Sun in the mid-1990s, and had an Apple blog on The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.
Dave has a BA in English and Mass Communications from Loyola University Maryland.