Diversify Your Portfolio by Investing in India

India has been one of the hot stock markets during the past year and could remain a good place to invest some of your money and diversify your portfolio. Known as one of the BRIC countries, India has one of the largest economies in the world and an up and coming consumer class with growing GDP.

Diversifying your portfolio by investing in emerging markets is a great way to even out corrections in the U.S. or European stock markets. India might be the best of the BRIC (Brazil, Russia, India and China) countries to invest in at this time.

The Indian stock market has had double digit gains so far in 2014 and many expect this to continue. Certain areas or sectors in India expect to continue growth with a large young population such as training and education. Power efficiency in India is a top priority of the government.

Indian sectors like lenders, automakers and engineering companies led the way with the best gains since these stocks will benefit the most from the growing economy. This is longest bull market for the Sensex since 1986 and investors and analysts see no end to this. Business confidence is high and capital spending is expected to increase and per-share earnings are forecast to increase 22% during the next year as consumer sentiment is increasingly positive.

A major reason for being bullish about Indian stocks is the election of Narendra Modi in May 2014, who is seen as being pro-business and as the Chief Minister of Gujarat state since 2001; he oversaw an annual growth rate of that averaged almost 10% in that state.

As of the end of June 2014, India’s economy grew 5.7%, and inflation hit a five-year low at 3.74%. It is always a good idea to diversify your portfolio into some emerging market and India is a great place to invest some of your money. ETFs are an easy way to invest in India’s growing economy.

Indian ETFs

You can diversify your investments in India to limit risk and to capture the overall increase in the Indian economy by investing in exchange traded funds (ETF) or exchange traded notes (ETN). You can invest in Indian ETFs that focus primarily large cap companies, small cap companies or a mix of all companies in India.

• WisdomTree India Earnings (EPI)
• iShares MSCI India ETF (INDA)
• iShares S&P India Nifty 50 Index Fund (INDY)
• Powershares India Portfolio (PIN)
• iPath MSCI India Index ETF (INP)
• Market Vectors India Small-Cap Index ETF (SCIF)
• EGShares India Small Cap ETF (SCIN)
• EGShares India Infrastructure ETF (INXX)
• iShares MSCI India Small-Cap ETF (SMIN)
• EGShares India Consumer ETF (INCO)

Companies in India

If you would prefer to invest in the company instead of an ETF, there are numerous large companies in India you can invest in to capture India’s growth. You can buy these Indian companies on United States stock exchanges.

• Infosys Technologies (INFY) is probably one of the most popular and heavily traded companies in India. They are an information technology (IT) company that also sells software to the banking industry.

• HDFC Bank Ltd (HDB) located in Mumbai has over 11 million customers with 760 branches.

• ICICI Bank (IBN) has commercial banking for both retail and commercial clients and includes insurance and asset management.

• Tata Motors (TTM) is an auto manufacturer of both passenger and commercial vehicles including the financing of their products.

• Wipro Ltd (WIT) has several areas of business including information technology services, IT products and consumer care and lighting products.

Mutual Funds

You can also buy the following mutual funds and closed-end mutual funds that invest in the companies of India.

• Matthews India Fund (MINDX) is an excellent mutual fund that invests in the best companies in India.

• India Fund Inc (IFN) is a closed-end fund that invests in the stocks of Indian companies across a wide range of industries.

• Morgan Stanley India Investment Fund (IIF) is another closed-end fund that invests in the stocks of Indian companies and also will at times invest in currency and options. 

Investing in India

There are other large companies in India you can buy on the Bombay Stock Exchange (BSE). For most of us, an easier way to invest in India and Indian companies is to invest using the above funds and individual companies that you can buy on the major U.S. exchanges. The growth prospects of India are exciting for investors looking to invest globally and diversify your portfolio. 

Copyright © 2014 Sam Montana