Kirsty Fong

Over the six months ended 30 September 2020, the company’s NAV increased by 25.8% to 517.73p in total return terms. The ordinary share price gained 32.6% to 435.00p, reflecting a narrowing of the discount to NAV from 20.3% to 16.0%.

The MSCI India Index (sterling adjusted), however, increased by 33.2% in sterling terms.

Hasan Askari, chairman of Aberdeen New India Investment Trust, said: “Aberdeen New India Investment Trust’s NAV grew consistently over a period in which Indian equities staged a remarkable recovery following a steep sell-off in March due to the Covid-19 pandemic. In such a rapidly evolving market, the Company’s NAV slightly lagged the Index, having outperformed on the way down. Set in the context of a longer time frame of ten years, Aberdeen New India Investment Trust’s NAV and share price have increased by 87.9% and 69.8%, respectively, comfortably outpacing the return of 43.8% for the Index.

Throughout the period under review, there was unprecedented monetary easing and fiscal stimulus domestically and around the world as governments and central banks acted promptly to limit the economic damage caused by Covid-19 and the associated social mobility restrictions and lockdowns.

“In India, COVID-19 relief measures focused on rural areas comprising cash disbursements for low-income households, a credit support scheme for small and medium-sized enterprises, infrastructure spending and incentives to improve the liquidity of the banking system. Abundant monsoon rains also helped and the effort was rewarded by a recovery in the rural economy.

“Amid the challenging conditions, the government continued to undertake reforms, which is an important step towards enhancing the structural foundation and global competitiveness of the country. India’s legislature passed two landmark bills that encouraged investment in agriculture. Other reforms included labour law changes, incentives for manufacturing and the proposed privatisation of the railways. Optimism over the reforms also supported the stock market which maintained its momentum through to the end of the period under review.”

Commenting on the outlook for Aberdeen New India Investment Trust, investment manager Kristy Fong added: “The Indian economy is still feeling the effects of the pandemic. That said, green shoots are emerging. Recent data, including exports, factory output and car sales, hint at a tentative rebound, albeit these gains need to be sustained, and consumption remains weak. Encouragingly, downgrades to earnings forecasts from companies seem to be moderating.

“It is in these difficult conditions that Aberdeen New India Investment Trust’s quality portfolio shines through with optimal underlying holdings that are equipped to ride through protracted shocks. This was reflected in the resilient June-quarter results of many of the portfolio’s holdings. Most are industry leaders with clear competitive advantages and are backed by robust balance sheets. They also possess clear drivers of earnings and growth, pivoted towards long-term structural trends. For instance, a rising middle class should drive demand for a variety of products and services across consumer, financial and infrastructure-linked sectors.

“Technology names and drug makers are also well positioned, supporting the global push for digital adoption and vaccine development. Therefore, we will remain disciplined, seeking out mispricing opportunities to add to favoured picks while reducing those with more challenged outlooks. Our focus continues on building a high conviction portfolio of quality holdings to ensure that the Company can continue to deliver sustainable returns over time.”