India’s stock market and ETFs were among hottest destinations of 2014. WisdomTree India Earnings ETF (EPI) rallied 28 percent in 2014 while iShares MSCI India (INDA) returned 22 percent. They far outpaced foreign developed markets, which lost -5 percent, and emerging markets, which fell 4 percent. Last year’s gains were driven by a flurry of economic reforms and a crash in oil -- one of its major imports -- which lifted a massive burden on government subsidies. The world’s largest democracy shows no signs of cooling off in 2015. Among a plethora of reasons to be bullish on India, here are my top five.

1. Attractive Valuations
EPI trades at 14 times forward earnings, 2 times book value and 1.1 times sales. It’s more expensive than China and other emerging markets, but is slightly cheaper compared with U.S. and foreign developed markets. The SPDR S&P 500 ETF (SPY) has a price-to-earnings ratio of 17, price-to-book value of 2.5 and price-to-sales of 1.8. iShares MSCI EAFE (EFA) carries a P/E of nearly 15, P/B of 1.6 and P/S of 1. Corporate earnings in India are expected to accelerate and even double over the next few years, which means companies should command higher valuations.

2. Ideal Demographics
More than half of India’s population is younger than 25 and more than 65 percent are below age 35. Demographers project in 2020 the median Indian age will be 29 years, compared with 37 for China and 48 for Japan. A younger population equates to more consumer spending as people form households and raise children and more workers supporting fewer retirees. The older a population, the less consumer spending because they’re past their prime spending years. Already home to 17.5 percent of the world's population, India is projected to be the world's most populous country by 2025 with 1.396 billion people, surpassing China with 1.394 billion.

Not only does India have more buyers but also greater opportunity for market growth for products and services at a time when Western markets are oversaturated. Only 11 people per 1,000 own cars in India compared with 34 per 1,000 in China and 440 per 1,000 in the U.S., as of 2009.

3. Prime Minister Narendra Modi’s Business-Friendly Reforms
Modi’s victory in the May election incited hope that the government would ease environmental restrictions to better compete with China, lighten gold import restrictions and spur infrastructure development. In June, Modi lifted a ban on industrial expansion in 43 areas that the Ministry of Environment and Forests enacted in 2010. Modi appointed a new like-minded environmental minister and stalled industrial projects are being approved quicker.

In November, the government did away with the controversial 80:20 gold import rule, which required that 20% of imported gold be exported before bringing in new gold shipments. Gold imports in November surged to 150 tons -- a fivefold increase year over year.

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