It is no secret that major U.S. stock market indexes have hit new highs. The Dow Jones Industrial Average is up over 20% so far in 2017, and the S&P 500 was last seen up about 18%. Economic growth has picked up steam in the United States, and the international growth story has been picking up as well. Investors have even embraced many of the world’s top emerging markets in 2017. The major US stock indexes have basically tripled from the crush-depth panic lows seen in 2009, and many investors are now looking out in 2018 trying to decide where they should be investing for growth and income in the years ahead.

Everyone knows that investors will pay up to chase growth, and it is quite possible that India might be one of the best growth stories in the world for 2018 and beyond. BRIC investors (Brazil, Russia, India, China) have had a harder time securing the same gains in recent years as in prior ones. After a major house-cleaning episode by India’s current regime, India is currently projected to have the best GDP growth trajectory of all major emerging markets for 2018 and 2019. If this comes to pass, it may offer strong support and set the stage for strong interest for investing in India. It is quite possible that India might offer the strongest footing for investors as they try to figure out where to place their investment money as 2017 fades away into 2018.

Before getting carried away on upside dreams, note that there are some serious issues and risks in India compared with some other emerging and developed economies. India may have a growing middle class, but there is massive inequality that leaves hundreds of millions of people on the very bottom. India’s governmental changes have also been severe, often killing or hindering the growth opportunities that had previously been expected. The semi-recent effort to eliminate large currency denominations came with pain. India still has a massive problem of poor (or nonexisting) infrastructure, and many of India’s major cities simply have no real-world fixes for the overcrowding, packed roads and transportation systems and the lack of sanitation. All these create serious opportunities for investors once you get past the risks and problems.

There are more than just the obvious problems to consider. The current belief is that India is close to halfway through its wide-reaching economic and institutional reforms. Some of the reforms remain in their planning phases, but a recapitalization of the banks and other efforts are creating a back-to-business attitude again. These include productivity gains, a return of foreign and domestic investments, and a rise in India’s competitive position compared to other nations.

A recent goods and services tax hopes to help by removing barriers to trade, and recent efforts to address many older bad debts and nonperforming loans are expected to assist in the growth. Other issues that the markets and economy have to look forward to are land reforms and labor market reforms.

24/7 Wall St. has taken several views on India here, for investors considering what to do with their money. We have taken freshly published synopses from credit ratings agencies, international quasi-governmental agencies, and brokerage firms for their views on India’s growth prospects from 2017 to 2019. We have also included snapshots and outlooks for the major exchange traded and closed-end funds tracking India, as well as looked at the top American depositary shares (ADSs) for Indian corporate giants that trade on major U.S. exchanges.

The CIA World Factbook is a key source for some basic economic and demographic data. It estimated that the population in India was 1.28 billion in mid-2017, and its population is a true melting pot of cultures, languages and religions, with a median age of just under 28 years old. India’s GDP for 2016 was estimated as $8.7 trillion, giving it the fourth-highest ranking in the world. GDP growth was 7.1% in 2016, 8.0% in 2015 and 7.5% in 2014. Still, the latest GDP per capita was just $6,700 in 2016 and $6,300 in 2015, and the population under the local poverty line remains close to 20%. India’s central bank also holds more than 557 tonnes of gold, ranking 11th in the world, but only about one-fourteenth of the United States in the pole position.

India’s general government debt was roughly 68% of gross domestic product in 2016, but India has managed to lengthen the average maturity of its total debt to about 10 years. Also worth noting is that most of that debt is now owed to domestic investors (institutions and individuals) and that debt is largely denominated in rupees rather than in dollars.

The Organization for Economic Cooperation and Development (OECD) just issued its freshly updated economic outlook calling for stronger global growth in 2017 and in 2018. The problem is that many of the world’s top economies, including Japan and China, face declining growth or flat growth in 2018 if that report proves true — but not in India. The OECD showed that India is projected to have growth of 6.7% in 2017, followed by growth of 7.0% in 2018 and then 7.4% growth in 2019. It has cited India’s reform programs aimed at boosting investment, productivity and growth. According to the OECD, India is set to gradually recover from the adverse impacts of rolling out the goods and services tax and measures to choke off the black economy, including demonetization.

And we would not want you thinking we only look at the good forecasts. Not everyone agrees that India will be the best market to invest in 2018. The International Monetary Fund (IMF) projected as recently as October that India would grow at 6.7% in 2017 and 7.4% in 2018, which are actually 0.5% lower this year and 0.3% lower for next year, compared with prior forecasts.

There is also the reminder that if economic growth expectations fall short then the investor view gets treated badly by investors. Morgan Stanley’s global 2018 outlook was more bullish on China and Brazil than India, noting that it reduced its Overweight rating on India to accommodate Brazil’s upgrade, and China remains its top Overweight rating in the global view for emerging markets.

Standard & Poor’s recently kept its sovereign rating for India unchanged at BBB- and retained its Stable outlook. On the other side of the coin was Moody’s, which raised India’s sovereign rating to Baa2 from Baa3 with a Stable outlook.

The Moody’s outlook is for real GDP to grow by 7.5% in 2018, with a similarly robust level of growth from 2019 onward. Moody’s was positive about bank recapitalizations and also noted that Indian insurers are well positioned to benefit from strong domestic economic growth. Its report from November noted this:

The decision to upgrade the ratings is underpinned by Moody’s expectation that continued progress on economic and institutional reforms will, over time, high growth potential and its large and stable financing base for government debt, and will likely contribute to a gradual decline in the general government debt burden over the medium term. In the meantime, while India’s high debt burden remains a constraint on the country’s credit profile, Moody’s believes that the reforms put in place have reduced the risk of a sharp increase in debt, even in potential downside scenarios.

If you go back to the OECD report, India’s efforts to digitize the economy and to improve tax compliance should act to boost tax revenue in the medium term. Those efforts were also accompanied by an increase in public pensions and wages. There were some state debt write-offs as well, all of which are expected to be neutral ahead.

The expected GDP gains are coming from a recovery in private consumption and on the notion that industrial production has bottomed out. Also worth noting is that the core inflation rate has hovered around 4%, down from almost 10% just five years ago. This potentiality that growth and emerging market investors will chase gains further into India is a sea change from less than two years ago. Even in early 2016, India’s investment prospects seemed grim.

24/7 Wall St. tracked three of the major exchange traded funds (ETFs) and closed-end funds and provided outlook data on five of the major Indian stocks listed on major U.S. stock exchanges. We have also provided information about four of the smaller ETFs that some investors may have overlooked.

iShares India 50 (NASDAQ: INDY) is a key ETF in India, with close to $1.2 billion in assets under management, and it tracks the investment results of an index composed of 50 of the largest Indian equities. This trades about 200,000 shares per day. Its shares were last seen trading at $36.40, with a 52-week range of $26.73 to $36.69.

The India Fund Inc. (NYSE: IFN) is the top closed-end fund dedicated to India, with about $888 million in net assets at the last official release of the company. Its net asset value at that time was $31.46, according to the data from Aberdeen Asset Management. Shares recently traded at $27.68, and the 52-week range is $20.39 to $28.81.

WisdomTree India Earnings ETF (NYSEAMERICAN: EPI) is the top ETF from recent years, and it most recently listed assets of $1.84 billion. Its shares were last seen at $27.24, with a 52-week range of $19.72 to $27.37.

Tata Motors Ltd. (NYSE: TTM) is the car giant in India worth more than $20 billion. On top of the Nano and other key brands in India and Asia, Tata Motors now also owns the Jaguar and Land Rover brands. Its U.S.-listed shares recently traded at $32.19. The stock has a consensus analyst price target of $45.00 and a 52-week trading range of $28.97 to $40.34.

ICICI Bank Ltd. (NYSE: IBN) is a key banking and financial services giant in India, with a $31 billion market value on last look. As of March 31, 2017, the bank was said to have had a network of 4,850 branch offices and 13,882 ATMs. Its U.S.-listed shares were last seen at $9.64, with a 52-week range of $6.69 to $9.93 and a consensus price target of $11.40.

Infosys Ltd. (NYSE: INFY) is a $36 billion IT-consulting leader in India. Its ADSs were trading at $15.56, in a 52-week range of $13.42 to $16.15 and with a consensus price target of $15.04.

Wipro Ltd. (NYSE: WIT), a $22 billion IT-consulting business in India, was last seen trading at $5.31. Its 52-week range is $4.50 to $6.40, and its consensus target price (from just a few analysts) was last seen at $4.91.

Dr. Reddy’s Laboratories Ltd. (NYSE: RDY) is a top pharma player in India for generics and branded drugs, and it operates internationally. Its U.S.-listed shares were trading at $35.53, with a consensus analyst target of $30.51 and a 52-week range of $29.83 to $47.75. Dr. Reddy’s has a market cap of $6 billion.

There are several other smaller ETFs that trade under 100,000 shares on most days. These have all seen big gains, but investors need to give these much more detailed reviews and deeper research than the major ETFs and funds listed above.

VanEck Vectors India Small-Cap ETF (NYSEAMERICAN: SCIF) was last seen trading at $65.08, and it has a 52-week range of $39.68 to $65.23. Its assets under management are $377 million. The ETF aims to win off the boom in India’s middle class sending up demand for discretionary goods and services, homebuilding and infrastructure. The underlying index had over 150 constituents as of the end of 2016, and it included offshore companies generating 50% or more of their revenues in India. The top 25 holdings have an index weighting of 1% to 2%, so no single company or sector dominates the ETF.

Columbia India Infrastructure ETF (NYSEAMERICAN: INXX) was trading at $15.41, within a 52-week range of $10.25 to $15.80. The underlying India Infrastructure Index is a maximum of 30 stocks that come with a free-float adjusted market cap-weighting to track companies in the infrastructure industry in India. Its top 10 holdings have an average weighting of about 5% each.

There is also the iShares MSCI India Small-Cap ETF (NYSEAMERICAN: SMIN), where the $50.87 share price compares to a 52-week range of $31.84 to $50.99. This ETF has just $281 million in assets and tracks the investment results of an index composed of small-capitalization Indian equities. This ETF’s top 10 holdings only have weightings of 1% to 2% of the entire fund, to keep any one company or sector from dominating the whole ETF. All in all, it holds more than 200 local stocks in India.

And for the fearless investor class, there is the triple-leverage Direxion Daily MSCI India Bull 3x ETF (NYSEAMERICAN: INDL). Trading at $96.10, it has a 52-week range is $41.90 to $99.88. This crazy ETF seeks daily investment results 300% of the daily performance of the MSCI India Index. Just do not forget about the price erosion that can take place through time in leveraged ETFs and do not forget that the “daily ETFs” can also come with serious tracking errors. Many online brokerage firms have gone so far as put triple-leverage ETFs on lists of stocks that should be avoided.

Many BRIC investors use the iShares MSCI Emerging Markets ETF (NYSEARCA: EEM) as the top way to invest in major emerging markets. This covers many spots in the trade for Brazil, Russia, India and China. The problem with this emerging markets ETF is that most of the top holdings are based in China, Korea and Taiwan. In fact, the exposure (rounded) for nations is 30% for China, 15% for South Korea, over 11% for Taiwan, and just over 8% for India.

The MSCI Emerging Markets ETF was last seen up a sharp 35% year to date in 2017, as of the end of November. This was above the year-to-date gains for the major India stock market ETFs so far in 2017:

• WisdomTree India Earnings is up 34.8%.
• iShares India 50 is up 31.0%.
• The India Fund up 30.9%.

The CIA World Factbook says of India’s outlook over time:

The outlook for India’s long-term growth is moderately positive due to a young population and corresponding low dependency ratio, healthy savings and investment rates, and increasing integration into the global economy. However, long-term challenges remain significant, including: India’s discrimination against women and girls, an inefficient power generation and distribution system, ineffective enforcement of intellectual property rights, decades-long civil litigation dockets, inadequate transport and agricultural infrastructure, limited non-agricultural employment opportunities, high spending and poorly targeted subsidies, inadequate availability of quality basic and higher education, and accommodating rural-to-urban migration.

Investors have to consider many items before blindly chasing higher GDP growth. Many factors can get in the way, and India’s political changes have often come with great changes from the prior regime. The long and short is that India is a nation that comes with many risks and opportunities for investors, but its growth is usually considered to be less government-driven than in China. Keeping its 7% and higher growth in mind, the United States has struggled for years to even get back to 3% GDP growth, and Germany has not even been able to run above 2% growth since the eurozone’s woes came up.

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