Four things to bear in mind about Indian markets:
1. The Indian population (according the UN) will surpass that of China within 30-50 years. Eventually, instead of 1-in-3 people being a Red Chinese, they will be a democratic Indian.
2. India, unlike China, is a western-style democracy which has an actual, true-to-the-term free market, unlike China's which pretends to be free and in which as many obstacles as possible are put in the way of Western business in terms of return on investment. The Chinese are more than happy to take our money, but make it difficult for us to take any back.
3. Free market + booming population + stable democracy = excellent market for US goods and services.
4. The Indian population is increasingly more educated and has far more purchasing power (in real terms) than your average Chinese peasant. The Chiense government will tell you differently, but if you believe them, you need a psychiatrist. The fluctuations in the Indian markets are understandable when you stop to consider just how much money is being pumped into them, and in the face of rising energy prices.
And just for good measure;
Chinese economic figures are suspect. Particularly when almost half the country lives outside the showpiece Coastal cities, and often in remote areas where the installation of a vending machine can be represented as a doubling or tripling of economic activity in the region.
I'm no expert, but it seems to me that India is a very good,long-term prospect. If you're one of those pump-and-dump day trader types, in it for a quick buck, then you won't like it. If you're in for the long haul (and you should be), it's a gold mine just waiting to be tapped.
What you said is all true (kudos for the list), but it makes several assumptions and does not take in to account the below:
1. Continued Indian increase in population might be a liability for India. India has only 1/3 the geographic territory of China, and only 1/2 of the arable land. Second, the bulk of population increases are coming from the poorest of poor regions (extension of poverty to the next generation), and predominantly in muslim areas (a potential source of tension in the future).
2. India's western-style democracy might perpetually lead them to socialist governments. The BJP cannot win with the current Congress-Communist coalition.
3. See #2. A democratic government never guaranteed a free market; they are separate concepts. If socialists are continually elected, India will only raise tariffs, which would mean a poor market for US goods and services.
4. Your last point lacks quantitative evidence and is solely anecdotal. Currently China's literacy is much higher than India's. This means the "average Chinese peasant" as you call them has greater access to opportunities than the average Indian (is the average Indian not a peasant too?). Sure the Chinese data is suspect, but there is no reason to believe the Indian data are any better, especially considering the linguistic chaos of India.
Last point about the quality of Chinese economic data, the Chinese economic data can be confirmed from export and import records in more reliable foreign countries. There is now greater evidence that the Chinese are UNDER-estimating their economic data, especially in private sectors along the Jiangsu-Shanghai-Zhejiang powerhouse corridor.
India has great potential, no doubt. But to deliberately say that India will definitely be economically better off than China in the foreseeable future (10-20 years) is certainly pushing it. There is a tendency to downplay every single negative India has, and exaggerate every single negative China has. It's like how a parent compares his child to others. No one wants a still nominally Communist regime to come out in the lead of a supposedly free society. But there are a lot of other factors that can limit India's economic development, as there are also for China. If there is indeed a race, it's clearly too close to call now.