The Indian markets have made tremendous gains since the beginning of the year, with both the Nifty 50 and BSE Sensex hitting record highs on Monday.
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India is JPMorgan's top pick in Asia, and one of its favorite markets globally, the investment bank's Asian Equity Strategist Mixo Das told CNBC.
"It's our number one market at this point," he said, highlighting that the South-Asian nation will continue to benefit enormously as companies increasingly adopt a "China plus one" strategy.
Although Vietnam is also a strong contender for companies looking to set up manufacturing facilities, "India has sufficient size and scale to fully replace or fully augment the kind of capacity that global investors and global manufacturers seem to want," Das told CNBC's "Street Signs Asia" on Tuesday.
Apple opened its first retail stores in India in April and started producing the iPhone 15 in the country in August, fueling optimism that other large companies would also looks at India as a favorable manufacturing destination.
Companies that already have a base in India are also expanding production capacity. The country's largest automaker, Maruti Suzuki, announced last week that it would invest $4.2 billion to build a second factory in India.
All this has bolstered investor sentiment, which had already been high with India's stock market emerging as one of Asia's best performers last year.
The Indian markets have kick-started the new year on a strong footing as well, with both the Nifty 50 and BSE Sensex hitting record highs of 22,081.95 and 73,000, respectively, during Asia's Monday afternoon trading session.
While India remains JPMorgan's favorite, China's economy has slowed and its stock markets clocked annual declines for a third straight year in 2023. But there may still be pockets of growth.
There have been periods of "tactical rallies" in the Chinese market, but "it just doesn't sustain," Das said, elaborating that household confidence remains "extremely low and investing in the equity market is one of the last things they are thinking about."
Foreign investors are unlikely to return this year.
"Foreign money has been extremely unreliable and it doesn't look like we can benchmark 2024 as a year that foreign investors come back aggressively into the China market," Das said.
"It's going to take a longer period of repair for business confidence to pick up" before investors see a "healthier" Chinese market through the course of the year, he added.