CHICAGO (Reuters) – Although the world’s largest democracy has been hobbled by inflation, a declining currency and difficult business environment, the pro-business Bharatiya Janata Party that just won an epic election in India has engendered optimism that the country can turn around its sagging economic scenario.
It’s time to increase your exposure to India’s stock market.
The timing is good with equities in India perking up of late, something that isn’t happening in the other “BRIC” emerging markets of Brazil, Russia and China.
The $1 billion WisdomTree India Earnings ETF, the largest exchange-traded fund investing in Indian stocks, has climbed 27 percent over the past 12 months through May 23 and is up 31 percent year-to-date. The fund holds large companies such as Reliance Industries Ltd, Infosys Ltd and Tata Motors Ltd. It charges 0.83 percent for annual management expenses.
For a play in smaller Indian companies, consider the Market Vectors India Small-Cap ETF, up nearly 40 percent over the past 12 months and nearly 55 percent year-to-date. It costs 0.93 percent annually for expenses and holds stocks such as Apollo Tyres Ltd, Ramco Cements Ltd and Hexaware Technologies Ltd.
NEEDS FOR GROWTH
Before digging in too deeply, be aware of the risks of investing in India. The bureaucratic business environment is tough to navigate, as well as corrupt. And the Indian economy is still sluggish – in the last fiscal year, growth slowed to a 10-year low of 4.5 percent from a high of 10.4 percent in 2010, according to The World Bank.