India: Bull or bear?

INDIA: BULL OR BEAR?

Short-term headwinds are unsettling the Indian economy, but should investors adopt a more cautious stance? Joanna Faith investigates.

Like most emerging market stories, India's long-term narrative remains compelling thanks to positive growth expectations, good corporate earnings potential and favourable demographics. But in the short term, the outlook is not so rosy. True, the country has had a good run during the past year, partly thanks to the isolated nature of its economy compared to other emerging markets - its export-to-GDP ratio is low and the domestic demand story is strong. But headwinds, including persistently high inflation which caused the Reserve Bank of India to raise its policy rate by 25 basis points...