Kristian Rouz Indian stock markets have been closely watched since August last year, when the then-newly-elected nations Prime Minister Narendra Modi launched an ambitious program of economic reform and development.

However, even though Modi started rapprochement with the United States in both political and economic terms, the investment money from the developed economies did not seem to move into the worlds most populous free market.

Not until early this week, when Australias UniSuper Management Pty announced they have recently seen enough development in Indias economic performance to consider buying some stock there.

The Indian government led by Modi seems to have managed improving business confidence by promising (and starting with some success) structural economic reforms, aimed at facilitating economic activity and easing regulation. This, coupled with the political friendliness towards the US and rest of the Free World, along with a global competitive edge provided by a cheap labour, is already bringing its results.

The governor of the Reserve Bank of India (RBI) Raghubam Rajan, introduced his inflation target policies back in January 2014, starting a standardization in New Delhis monetary policies, thus contributing to Indias trustworthiness. Now, the government announced it would make formal corrections in the RBI act, thus providing flexible control over the volatile prices under the law. Consumer inflation targets are set at 4%, plus or minus 2%.

There is a paradigm shift going on in India, as the nation seems to be willing to modernize its economy aggressively in order to stand in line with developed economies, rather than emerging markets like Korea or Taiwan.

The next reforms the Modi government is expected to implement are the introduction of a nation-wide standardized goods and services tax (GST) by April 2016, and a cut in central banks interest rate by at least one fourth from its current reading of 7.75%.

Both the fiscal standardization and the monetary easing will allow more money into Indias financial sector, triggering a domestic-driven appreciation in the nations equities. Foreign investors thus would greatly benefit by putting their money into those same stocks, as would India from a possible influx of FDI. This would be a perfect win-win situation.

Besides, the Modi government seems to be copying some of the policies practiced by the Obama administration in the US.

New Delhi announced the budget deficit will increase to a 3.9% GDP from the consensus estimate of 3.5%-3.7% in order to finance large-scale governmental investment in the economy. Some $11.3 bln will go into the development of infrastructure, while the corporate tax will be lowered from 30% to 25% by 2019. Some 60 mln houses are planned to be built with the governmental money by 2022, suggesting a rally in the housing market.

All of these measures are a clear signal of a significant liberalization in Indias economy and also bear a long-term benefits for economic growth. India has accumulated a record $334 bln in FX reserves, which only adds to the nations international investment credibility.

No surprise that having looked at all this, Australias Unisuper decided to put A$200 mln in Indias equities via either a fund manager or an ETF (the latter being more profitable, the former more solid).

India has the potential to be the next big thing, Unisupers Chief Investment Officer John Pearce said. The reform agenda in the country, onus on growth, policy certainty for businesses will aid sentiment for Indian equities.

Now, scrape up your money and go buy yourself some stock. Indias benchmark index is called Sensex, and it skyrocketed by 30% in 2014, while being still undervalued.