The company’s net asset value (“NAV”) rose by 6.1%, while the share price rose by 7.2% (both figures in sterling total return terms).

By comparison, the benchmark MSCI India Index (the “Index”) rose by only 0.8% in sterling terms.

However, the results reveal that over the longer term, Aberdeen New India continues to outperform the Index.

Hasan Askari, chairman of Aberdeen New India Investment Trust, said: “A more challenging period awaits India. Softening credit growth, due to the stress in the financial sector, could have further adverse effects across the economy, stifling the incipient consumption-led recovery.

“It could also weigh on industrial activity which has seen persistent weakness. Additionally, concerns over simmering trade tensions, a strengthening US dollar and decelerating global growth could all affect sentiment.

“In Mr Modi’s second term in office, his administration will face the unenviable task of driving change in highly-politicised areas such as land and labour regulations. The previous attempt at land reforms was poorly executed which resulted in a sizable portion of inhabitants being displaced.

“This has created some mistrust of the authorities on the subject. In order to reform the complex maze of outdated land and labour laws, Mr Modi will have to reach out to a number of stakeholders, including the trade unions, and persuade them to make the necessary concessions for the overall good of the economy.

“Meanwhile, the administration also needs to address the issue of persistent weak demand. Even though the corporate tax cut provided an incentive for private businesses to expand and invest in new production facilities, they are unlikely to do so if existing capacity is not fully utilised.”

He added: “In spite of these issues, the country still possesses attractive structural advantages such as a large domestic market, attractive demographics with a sizeable young working population, and some of the best-managed companies in Asia.

“As such, we remain optimistic over the country’s long-term potential and hence over our underlying companies’ prospects and growth. Picking the right stocks is crucial and your Company remains well-positioned to navigate the possible adverse conditions. Your Manager has reviewed the holdings in the Company’s portfolio to ensure that they have sound fundamentals, including robust balance sheets, pricing power, experienced management, clear growth prospects and stringent environmental, social and corporate governance (‘ESG’) standards.

“Hence, while we expect to see some short-term volatility for stocks, we remain cautiously optimistic that the market’s longer-term potential, coupled with your Manager’s prudent investing philosophy, will continue to deliver steady growth for shareholders.”

Kristy Fong, manager of Aberdeen New India Investment Trust, added: “In the near term, concerns over the liquidity and solvency of the shadow banking sector, as well as slowing domestic growth and global macroeconomic uncertainty, will continue to affect the market.

“These factors were reflected in the cautious note struck by many of the company’s holdings for the short term in the most recent earnings reporting season. On a brighter note, above-average monsoon rains will likely boost rural incomes and, along with the recent Diwali festival, bode well for consumer spending. Recent corporate tax cuts have made valuations more attractive and will help support a recovery, particularly in the financials and consumer staples sectors.

“Notwithstanding its present challenges, India still has many structural drivers of long-term growth. It maintains a big domestic economy and an entrepreneurial culture. Furthermore, it stands to benefit from still-low oil prices and multinationals looking to relocate their factories out of China to avoid US trade tariffs.

“Its prowess in computer engineering makes it an increasingly important force as industries, ranging from automotive to finance, embrace digitalisation. The portfolio is geared towards these long-term growth sectors. In the meantime, the Company’s holdings should continue to be supported by their robust balance sheets and steady cash flows.”