India Fund (NYSE: IFN): Direction isn’t an Issue; the Real Issue is Global Markets’ Sentiment

In the year 2024, the India Fund (NYSE: IFN) has exhibited strong performance, witnessing a notable rise of +36.5% from its lowest point in October '23 to its peak in March, all while offering an appealing dividend.

However, concerns regarding possible overvaluations and market exuberance have led to a significant decline of more than 7% for IFN. The impressive growth of India and the outperformance of Indian stocks have been key drivers of the market rally. However, as with any significant movement, there are concerns about the valuation of these stocks. Therefore, the main question now isn’t if India’s economy is still in full swing — most likely, it really is — but whether investors would opt to take profit eyeing the less than obvious international monetary environment.

If the price continues to decline and reaches the proximity of $17.00-$17.50, it may be a favorable opportunity to buy the dip. The Fund has consistently delivered impressive returns and has consistently outperformed the MSCI India benchmark. Market expectations are gradually increasing for a potential interest rate cut of at least 25 basis points by the U.S. central bank in June, with a current probability of 70.4%. Notwithstanding, India's current account deficit has decreased to $10.5 billion or 1.2% of the GDP in the October-December quarter, compared to $11.4 billion in the previous quarter and $16.8 billion in the same period last year, which must be viewed as an encouraging fact for the rally to continue.