India's Record Week Displays Emerging Market Strength

A revolution is unfolding in the world's emerging markets. Looking for better returns, investors are searching far and wide for the world's best investments. While the giants face financial stagnation, emerging countries are taking the spotlight for the best equity returns.

India's Coming Back

India's economic outlook looks far better than it did even one year ago. The country is now on track to shed a quarter of its foreign trade deficit, which is a benefit for any emerging market. Couple the economic fundamentals with a new leader ready to pass economic reform measures in India, the country could emerge as the “least emerging” of all the markets.

The Economy is Growing Up Quickly

India's economy is growing rapidly, employing more people and making use of its most valuable asset: labor. As India booms both in manufacturing and outsourced projects from the most established economies, it’s also becoming a huge presence online. With more than 1 billion people living in the nation, the country is set to become a true economic power as India moves its economy to profit on globalization.

A Stable Currency Is a Good Place for Business

Emerging markets are notorious for record inflation rates and huge trade imbalances. This is not necessarily the case for India, whose currency has risen nearly 10% against the dollar in less than three months. Since falling through the 200 day moving average, the USD/INR pair is tumbling quickly, increasing the buying capacity of Indian consumers.

A Consumer Economy

The next wave in India's growth will surely come from the purchasing power maintained within its own borders. Investors are already seeing this shift in China where in just one decade Chinese consumers have caught up with the rest of the world in technology and personal transportation. All of those products are, of course, made in China, helping to spread the wealth within borders, not outside of them.

ETFs Profit from Emerging Growth

The best opportunity investors enjoy to profit from Indian stocks is through exchange-traded funds. One such fund, WisdomTree India Earnings Fund (EPI), has soared more than 50% since the beginning of 2009. That may just be the beginning for a country well on its way to becoming a developed economy.

Disclosure: Author owns no India stocks

Comments

[a.shzad:]

"India's Record Week Displays Emerging Market Strength"

I agree that emerging markets are strong but the recent Stock rally was because of the election results. Congress got not just a majority but a clear majority which was not expected.

Congress is the party that is generally credited for recent Indian growth. Another term by Manmohan Singh (this time with more freedom), means more continuity in policy , more stability and hence the rally to adjust the stocks to the new expectations.

May 29 12:58 AM