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Rising Optimism for India in 2023: Strong Earnings and Post-Pandemic Boom

India's Nifty 50 index has hit a record high, driven by strong corporate earnings and a post-pandemic retail boom. Global investors are increasing their exposure to India while M&A deals have surged and the stock market is forecast to rise 9% in 2023.

India's Nifty 50 index hit a record high in December and rose 5% this year, making it one of the few markets to rise in spite of rate hikes and slower growth in the world. The performance has helped India double its weight in MSCI's emerging markets index to 16%.

2023 will be a high earnings year for India. The retail sector, which was booming after the epidemic, will grow by 6% in the next fiscal year. India is expected to be one of the fastest-growing economies in the coming year. Global investors, sovereign funds, and institutions are raising their exposure to India in their emerging markets portfolios.

Life Insurance Corp of India Records Largest-Ever IPO
India recorded its largest ever IPO with the $2.7 billion issue of Life Insurance Corp of India, making it the fifth-largest valued firm. The IPO came after the government offloaded its debt-laden Air India to Tata Sons for $2.4 billion in enterprise value.

M&A Deals in India Soar despite Asia-wide Declines
Despite Asia-wide mergers and acquisitions (M&A) deals falling to 8-year lows, India saw a surge in total deal value jumping 33% on the year to $164 billion, mainly boosted by the $40 billion purchase by HDFC Bank of its parent.

Analysts Forecast India's Stock Market to Rise 9% in 2023
Analysts polled by Reuters last month forecast India's stock market will rise another 9% by the end of 2023. GDP is projected to grow from 6.8% to 7% in the current fiscal year. However, foreign flows could remain weak and valuations have priced in expectations of superior earnings growth over the next couple of years.

India Wins Business as China's Zero-COVID Policy Disrupts Supply Chains
As China's zero-COVID policy has disrupted production and supply chains, India has been taking advantage of the situation. Apple has said it will manufacture iPhone 14 in India, while a key supplier Foxconn plans to quadruple the workforce at its Indian plant.