If I could go back in time to the ’70s, I would invest in China. It’s been a little over 30 years since China opened its economy and the results are incredible!
Those who saw China’s potential early on, have been rewarded handily.
India, China’s western neighbor, taking a cue, opened its doors relatively recently in the early 90s. India too, has shown tremendous growth and to see where India might me in another decade, just look at China today! For those who missed the China train, India might be a good opportunity. Even Buffett thinks so!
How does one invest in India?
To invest directly in Indian markets, you need to be a resident. India is yet to open it’s exchanges to outside investors. The next best option is to invest in Indian companies listed in the US stock exchanges called ADRs. Indian ADRs can be bought and sold as regular shares and of course bound by US market eligibility rules.
Here are some of the most popular Indian stocks that trade in Nasdaq and NYSE.
|INFY||Infosys is one of the largest technology services companies in India with over 122,000 employees with a presence in 33 countries. It has a market cap of over 41billion and had an operating margin of over 27% in 2010. |
$100 invested 5 years back in INFY would be worth $188.07 today.
|CTSH||Cognizant's market cap is half of that of Infosys', but with a lot of room to grow both being competitors in the BPO space. Cognizant's PE is much higher than that of Infosys at 34.58 as opposed to Infosys' 28.93.|
$100 invested invested 5 years back in CTSH would be worth $273.24 today.
|Also See: WIT, PTI|
|RDY||Dr. Reddy's Laboratories is a low cost manufacturer of generics pharmaceuticals. A major portion of its sales is from North America and Europe and recently was given approval by the FDA to manufacture and market the generic version of the popular allergy medication Allegra. DRL's other business segments include Pharmaceutical Services and Active Ingredients segment and Proprietary Products segment.|
$100 invested invested 5 years back in RDY would be worth $243.63 today.
|TTM||Tata Motors Limited|
Recently there was a lot of buzz over the word's least expensive car - the Nano! Well Tata Motors is behind it! Tata is one of the oldest business houses in India with a lot of influence and capital to withstand market turbulence. Even though the automobile market is extremely competitive in India, Tata Motors is a name to reckon with. Tata Motors is also the largest automobile company in India manufacturing a range of automobiles from cars and trucks to SUVs and buses. It also a supplier of defense vehicles to the Indian military.
In the international arena, Tata Motors owns Jaguar and Range Rover.
$100 invested invested 5 years back in TTM would be worth $137.14 today.
|TCL||Tata Communications Limited. Another Tata company! The telecom market it India is one of the largest and fastest growing in the world. TCL is India's main international long-distance provider. TCL operates in over 40 countries providing connectivity to over 200 countries and nearly a million square feet of colocation and data center space worldwide.|
$100 invested 5 years back in TCL would be worth $53.87 today.
|HDB||HDBC was one of India's first banks to be privatized in 1994 by India's federal reserve, the Reserve Bank of India . HDBC is poised to take advantage of India's booming economy and real estate markets by providing financing and deposit services for its customers. Its business operations include credit cards, debit cards, ATMs, bill pay, housing loans, auto loans, brokerage services and banking. |
$100 invested 5 years back in HDB would be worth $322 today.
|Also See: IDB|
|MMYT||Make My Trip is India's most popular online travel booking site similar to Expedia and Orbitz in the US. |
Online booking is relatively a new concept in India and with rapidly expanding internet usage, MMYT is poised to take advantage of this market.
$100 invested at IPO August of last year would be worth $118.56 today.
|Also See: REDF|
The second option is to diversify and invest through India ETFs.
|PIN||PowerShares India Portfolio|
This ETF is designed to track the Indian markets in general through a group 50 Indian stocks tracking the Indus India Index ranging from information technology, health services, financial services, heavy industry and consumer products.
|EPI||WisdomTree India Earnings Fund|
This ETF tracks the performance of Indian companies as determined by WisdomTree Investments.
|INP||iPath MSCI India Index|
INP tracks the MSCI India Total Return Index that is made up of the top 68 companies by market cap as listed in India's National Stock Exchange.
|INDY||iShares S&P India Nifty 50 Index Fund|
The index tracks the top 50 Indian companies that trade in the Indian market and tracks S&P's CNX Nifty 50 Index.
Finally, you can also trade through US companies that have a significant presence in India or stands to benefit from India’s growth. For instance, the Illinois based company Caterpillar stands to gain tremendously from India’s poor infrastructure. Where others see a hurdle, Caterpillar sees opportunity.
Fast food is another area. Indians are taking a liking to fast food as dished out by McDonalds, KFC and Pizza Hut. Coke and Pepsi were one of the first to enter the Indian markets. And feeding a country of 1.2 billion is big business.
Disclosure: I own positions in PIN, TCL and CTSH