The chart below tells us more than the performance of the US listed Indian stocks in 2007. What it tells us is just how strong the Indian economy is and the rise of the Indian consumer.
The companies that targeted the local Indian consumers and the local Indian market emerged as the clear winners in 2007.
Telecom and Banks led the way. However, technology companies that depend on western markets such as United Sates under-performed during the year.
The two Indian Internet plays, Sify (SIFY) and Rediff (REDF), are looking more like Lycos and Excite. These two stocks are showing no signs of life and I am not sure 2008 will be any better. Internet in India still hasn’t emerged as people expected it to. You can’t go just by numbers and growth figures. Broadband is still a dream for most consumers in India. I am planning to write about this topic soon so I will leave the bulk of my thoughts for that article.
Tata Motors (TTM) and Dr. Reddy’s (RDY) basically went no where but still look promising for 2008 and beyond. Tata is still waiting on the Jaguar and Land Rover decision and the Rs. 1 Lakh ($2500) car is supposed to be launched in 2008.
The newly listed Sterlite (SLT) has almost doubled since it’s IPO.
Now the best way to get exposure to Indian Market was via an Indian ETF or CEF’s. INP led the way with a 86% return in 2007.
Unfortunately, lots of great Indian companies are not listed in the United States and the best way to play the Indian market might as well be INP. However, with Sensex near an all-time high you want to time your entry well.
With the Indian economy booming and as the ever increasing middle class continues to see their purchasing power increase, investing theme for 2008 is pretty clear. Invest in Indian companies that target the local market rather then ones that depend on western markets.
2008: The year ahead
Find good entry points for:
- HDFC Bank (HDB)
- ICICI Bank (HDB)
- INP (ETF)
- Sterlite (SLT)
** Dividends not included
|Stocks||2007 % Gain|
|Videsh Sanchar (VSL)||98.00%|
|Sterlite Ltd. (SLT)||93.97%|
|IPATH ETNS (INP)||86.44%|
|HDFC Bank (HDB)||74.05%|
|Mahanagar Tel. (MTE)||53.93%|
|ICICI Bank (IBN)||46.39%|
|India Fund (IFN)||35.64%|
|MS India Fund (IIF)||8.01%|
|Dr. Reddy’s (RDY)||0.33%|
|Tata Motors (TTM)||-5.79%|
|Patni Computers (PTI)||-19.73%|
|WNS Holdings (WNS)||-47.43%|