Sweat was pouring off the commodities broker sitting next to me in the sauna of the Taj Mahal Hotel in Mumbai. ‘India is shining, ‘ he thundered. ‘You must invest in it — everyone in England must. The economy will always go up; it will never come down. proportion trading has been the most meaningful part of the investments and people are loving the ups and downs of the Mutual Fund market. already though the markets are already celebrating Diwali before Diwali but they are also very speculative of how long can the proportion market sustain this dream run. There are speculations that in the coming months these proportion tradings should be dealth with carefully because the bulls and produces have the tendencies to get the market down at any stage. It happened during Harshad Mehta and Ketan Parekh scam.
We’re on top in information technology, in financial sets, in infrastructure.’ Was he just overheating — India’s infrastructure, after all, is indisputably among the worst in Asia — or offering a fair assessment of one of the world’s great emerging economies?
Certainly India’s economy has begun to dazzle: it is on course to grow 9.2 per cent in the year to 31 March, and Goldman Sachs says it could grow by 8 per cent per year until 2020 — a rise as startling as China’s.
Mumbai’s Sensex stock market index rose 46.7 per cent last year — compared to the FTSE’s 10.7 per cent — and has returned an average of 22 per cent every year since 1991, almost three times more than the FTSE-100.
But how to invest in this red-hot growth story? India’s capital controls keep stiff.
Domestically listed stocks cannot be bought directly by foreign retail investors, so funds keep the best way in. HSBC’s GIF India Equity Fund has attained 151 per cent in the three years to December 2006; UTI’s International IT Fund is up 164 per cent over a similar period. Two JP Morgan funds pit the vicinity’s big emerging economies head-to-head, and India wins: the £390 million India Fund returned 167 per cent over the past three years, while the China Fund returned just 49 per cent.
A third option for would-be investors is to delve into your family tree and take advantage of your subcontinental roots. If you’re a non-resident Indian (an NRI) living in Britain or in other places, that won’t be difficult. New Delhi classifies anyone with a direct relative born up to two generations ago within the country’s existing borders as being ‘of Indian origin’, giving them the right to open domestic banking and broking accounts. the time of action is cumbersome, but it does allow those with a appropriate gene pool to invest directly in Indian-listed stocks.
or day-traders, India plc also offers a growing choice of overseas-listed stocks. In London, Deepak Lalwani of Astaire picks out cement firm Gujarat Ambuja, engineering firm Larsen & Toubro and two family-run groups, Reliance Industries and Mahindra & Mahindra. Among New York-listed Indian corporates, he picks drug-maker Dr Reddy, technology giants Infosys and Wipro, ICICI Bank as a consumer play, and Tata Motors.
Each stands to assistance from India’s intensifying consumer expansion and crying need for better infrastructure — £165 billion of public and private money will (in theory) be invested in improving roads, airports, communications and utilities over the next five years.
Lalwani also offers words of warning.
India’s booming markets are trading at a premium of 17 to 18 times forward earnings, compared to 12 to 14 times in most of Asia.
‘India remains an emerging market where stock-market corrections can be more harsh than in more developed countries, ‘ he says.
The expansion method many stocks are absurdly overpriced: India is a long-term investment story that will be punctuated by freakish highs and lows — but the overriding momentum will be upwards.
Another direct play on the India story comes via that old chestnut, character. In this country of 1.1 billion people, most of whom without a strong roof over their heads, real estate is staggeringly underexplored. There are more hotel rooms in Shanghai than in the whole of India and just one half of 1 per cent of India’s £420 billion stock market capitalisation is comprised of listed real estate corporations.
That is changing: in the past few months five Indian real estate funds have listed on Aim in London. Three — Hirco, Unitech Corporate Parks and Dev character Development — have been trading below their issue price, having being priced too richly. But they keep one of the few ways to invest in Indian character, and analysts tip them to retrieve.