In what appears to be an interesting economic development, investors are withdrawing billions of dollars from China's slowing economy, marking a significant shift two decades after considering it the world's major growth story.
Moreover, the focus has now shifted to India, with major financial institutions such as Goldman Sachs and Morgan Stanley endorsing India as the top investment destination for the next decade as per a report by NDTV.
This trend has sparked a gold rush, with hedge funds and other investors making significant bets on India's growth potential.
Marshall Wace, a $62 billion hedge fund, has positioned India as its largest net long bet after the US.
Vontobel Holding AG and Janus Henderson Group Plc are also increasing their exposure to India.
India's rapid economic growth under Prime Minister Narendra Modi is attracting global capital and supply chains and comes at a time when China is grappling with economic challenges and strained relations with the West.
The global enthusiasm for India is reflected in capital flows, with the main US exchange-traded fund buying Indian stocks receiving record inflows, while China-focused funds experience outflows.
India has also briefly surpassed Hong Kong to become the world's fourth-largest equity market.
Morgan Stanley predicts India's stock market will be the third-largest by 2030.
The shift in index weights indicates a diminishing role for China and the simultaneous growing significance of India.
Even Japan's traditionally US-focused retail investors are warming up to India, with India-focused mutual funds gaining popularity.
The government's commitment to infrastructure spending, efforts to expand the digital marketplace, and initiatives to globalise the rupee have contributed to the growing confidence in India's economic future.
While challenges such as stretched valuations and the risk of a market correction exist, investors remain optimistic about India's long-term potential.
Bhuvan Krishna is Staff Writer at Swarajya.
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