Why the Indian Stock Market is Booming – And How You Can Take Advantage
by Karim Rahemtulla, Emerging Markets Analyst
Tuesday, April 6, 2010: Issue #1232
The Indian stock market is booming.
Having fallen along with other world markets during last year’s crash, it actually bucked the global trend and was nowhere near testing its multi-year lows. And on Monday, Indian shares hit a 25-month high.
India’s stock market returns over the past couple of years have actually beaten most other global markets. And with good reason…
- While it’s still classed as an emerging market, India’s strength comes from the fact that its internal market is not only huge, but also better insulated than China, Brazil, Russia and South Korea. It operates at its own pace, seemingly oblivious to what happens around it.
- With a population of over one billion, India has a huge edge over smaller emerging markets because it has the critical mass to withstand minor shocks to the system.
- India isn’t reliant on a huge export market for the bulk of its growth.
- It has a huge, educated middle class. In fact, India’s middle class population is larger than that of the entire United States. Of course, this middle class earns less on average than poverty line families in America, but it has the capacity to spend enough money to buy products that were once considered luxuries (washers/dryers, TVs, cars, etc). This generates tremendous economic activity without the issues of trade balance.
- Because of India’s protectionist business nature, companies tend to thrive without the threat of multi-national competition.
But this isn’t all that India has in its favor…
Infrastructure Boom Spells Profits for India’s Construction Giants
Along with a growing export market, India is also in the midst of a multi-hundred billion-dollar infrastructure boom.
The investment potential within the infrastructure sector is enormous. Companies like Larson & Toubro dominate the construction and infrastructure markets and are very well positioned to profit from the increased spending.
And while there are obviously a huge number of foreign companies that operate in India, they have to deal with the unpredictability of a market that is open, yet closed.
For Indian firms, however, the sky is the limit. The home-grown successes of Tata Motors (NYSE: TTM), Reliance Capital and Mittal, before it became international steel giant, Arcelor-Mittal (NYSE: MT), have allowed them to build up huge war chests of cash. They’re now re-deploying it into the relatively young Indian export market.
The Insider’s Look At India’s Growth Potential
Later this year, I’ll be leading another investment expedition to India to explore some of these opportunities first-hand.
Our group will be small and we’ll meet with top executives of the top companies. On our last trip, for example, we met with firms in the huge entertainment sector… the fastest-growing bank… companies in the manufacturing sector… and the world’s largest information technology outfit, Infosys Technologies (Nasdaq: INFY). We even took a personal tour of its massive campus and just a single investment in the company’s stock would have paid for the trip several times over.
Investment U’s own parent company has business operations in India and the division has become one of the most respected and fastest-growing financial research firms in the country. Through our contacts there, we have the ability to visit firms directly and get great, first-hand insights – information we simply wouldn’t have by looking at annual reports.
Good investing,
Karim Rahemtulla
Any investment contains risk. Please see our disclaimer.
7 Responses to “Why the Indian Stock Market Is Booming – And How You Can Take Advantage”
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Dubbed a "market maven" by CNBC, Karim Rahemtulla is one of the country's foremost specialists in options trading. As founder and editor of The Smart Cap Alert, he focuses his efforts on all aspects of options trading – LEAPS, put selling/covered calls and spreads. 
I have seen a tremendous increase in tourism and travel to India from the USA. Many prominent businesspeople are exploring the rising opportunities within India. More airlines are scheduling flights to India as the country’s commerce and business grows.
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If only India could avoid frequent political bickerings and the policy makers could focus more on pure economic issues, the progress would be awe-inspiring and could hit the summit of the Mount Everest!
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Karim,
With the new Healthcare laws being imposed here in this country.
I was wondering if the support services sector of the India economy might be poised for growth.
The impact of universal health coverage for millions of Americans would creat a lot of additional paperwork and support services.
Thanks
Russ
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What’s the NYSE ticker for Reliance Industries? Are there any other Indian ADRs, apart from MT, TTM,INFY,WIT, traded on NYSE?
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Hyder,
Reliance Industries is not found on the NYSE, but you can find its ticker symbol by searching for it on Yahoo Finance, Google Finance or similar sites. As for other Indian ADRs, unfortunately, we can only comment on information already in the article.
Thank you,
Investment U
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The Indian economy is definitely prospective over decades of its history and shows further rejuvenating investments at the end of each fiscal year. With the emergence of new sectors like Telecom, medicine, metals, IT and outsourcing, the stock market has gained strong feet into the global scenario. With potential investment options, the Indian market economy shows an improved and a quicker recovery time than the European and the US market. NRI investment additionally supports the economy, showing belief in the recovery trends of the Indian market. All stock exchanges remain inherent with its feature of volatility; however the Indian stock market has always proved itself by showing expansion. Befitting the growth trends, the SEBI regulations further enhance investments that support the sector specific industries as well as attract foreign investments by setting investor-friendly norms for them. With the advent of online stock trading, the intricacies of the functioning of the market strategies have now been known; thus bringing to fore the complicated, hidden investment stratagem. Good broker portals now adorn the strong functioning of the market. Check for more progressive trends at GEPL.
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Most of the investors seems to be confident about the India’s growth story. Fundamentally, India still looks stronger.
People are interested in trading and in investments and marketing is growing up.
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