Over the past month, India conducted the world’s largest exercise in democracy, sending more than 445 million voters filed into some 828,000 polling places to elect 543 candidates to the lower house of the country’s parliament. After more than a month of voting, results were recently announced by the Election Commission. The winners: the Indian National Congress and India ETF investors.
The Indian National Congress took more than 200 seats in the election and will be able to form a government in Delhi without major allies for the first time since the 1960s. Also claiming a victory were investors in Indian ETFs, which surged this week on news of the results as investors cheered the stability of the newly-elected government and the opportunity to rule without political coalition dynamics.
Indian ETFs have surged this week, with INP, EPI, and PIN posting gains on Monday of nearly 25%. Trading was so torrid in Indian equities following the election that the Bombay Stock Exchange suspended trading on Monday after the Sensex Index hit its upper daily limit.
Even before Monday’s tremendous rally, Indian ETFs had posted solid gains on the year, with the aforementioned ETFs up around 20% YTD before this week. India ETFs are now up around 50% in 2009, compared to a flat performance from IVV. In an otherwise gloomy economic environment, investors holding Indian ETFs in their portfolio have been a sudden flash of light. What remains to be seen is whether it is the dawn of a brighter day for investors, or simply a flash in the pan.