Indian equities fell in the third quarter as higher oil prices, a Federal Reserve rate hike and September foreign selling erased the gains of July and August. NDIA outperformed its benchmark the MSCI India Index (net) through stock selection.
Market Review
Indian equities fell 5.61% in the third quarter after a modest gain through August.1 Brent crude rose more than 20% in July after a fragile pause in the US-Iran conflict collapsed.2 The Federal Reserve raised rates in September for the first time since 2023,3 and foreign portfolio investors, net buyers in July and August, turned net sellers.4 Dispersion ran wide. In the benchmark, Consumer Staples, Utilities and Industrials fell the most, while only Information Technology and Real Estate rose.5 GDP growth remained robust and domestic demand held firm, with September GST (goods and services tax) collections up 14.7% year over year.6
Fund Performance & Attribution
NDIA outperformed its benchmark for the quarter by 88 basis points. Year to date, NDIA returned -12.37% at NAV versus -14.94% for the benchmark.7 This attribution nets each issuer’s local, ADR and GDR lines into one position, isolating the stock decision from the vehicle.8
Contributors: From a sector perspective, Consumer Discretionary, Materials and Industrials added the most. Stock selection drove each: NDIA held underweights of 0.79, 0.92 and 0.31 percentage points, but its holdings returned 2.27%, 1.36% and -5.50% against -1.43%, -3.45% and -8.51% for the benchmark sectors. In terms of individual securities, an overweight in Eternal (2.46% versus 0.77%), an overweight in Federal Bank, which we sold during the quarter, and the absence of Suzlon Energy, which fell 33.77% in the benchmark, contributed most.
Detractors: From a sector perspective, Financials, Energy and Real Estate lagged. NDIA held overweights of 0.68, 0.79 and 1.31 percentage points, and its holdings trailed the benchmark’s in each. In terms of individual securities, Go Digit General Insurance, which the benchmark does not hold, Axis Bank (5.52% versus 2.21%) and Avenue Supermarts (2.32% versus 0.44%) detracted most. Reliance Industries, held through its GDR, also detracted as the GDR trailed the local line.
This quarter we added IndusInd Bank and sold Federal Bank.9
The performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when sold or redeemed, may be worth more or less than their original cost and current performance may be lower or higher than the performance quoted. Performance current to the most recent quarter- and month-end is available at https://www.globalxetfs.com/funds/ndia/. Expense Ratio: 0.75%.
Holdings subject to change
Outlook
We stay constructive on India heading into the fourth quarter based on 4 factors:
Risks include further Fed tightening and elevated oil prices.
Why This Fund
We believe active management remains critical to navigating dispersion across Indian sectors and stocks. Companies that generate returns above their cost of capital, supported by strong management teams, could outperform. The strategy focuses on identifying businesses with durable competitive advantages and the potential to compound returns over time. NDIA, the first active India ETF offered by Global X ETFs, delivers bottom-up fundamental analysis, supported by a Mumbai based team at Global X’s affiliate, Mirae Asset, with the fee structure, liquidity, transparency, and potential tax efficiency of its ETF wrapper, at an expense ratio of 75 basis points.12
Related ETF
NDIA – Global X India Active ETF
Click the fund name above to view current performance and holdings. Holdings are subject to change. Current and future holdings are subject to risk.
