As Canadian markets celebrated record oil and gold prices, Indian markets tumbled. From the Ides of March 2009, the Bombay Sensex had made a spectacular recovery and hit an all-time high of 21,000 last November. Since then, it is down 16%. With a weaker Rupee, EPI, the Wisdomtree India ETF is down 23%. To paraphrase Caesar, "Ouch!"
As a net importer, higher oil prices hurt India. Industrial production growth slowed sharply to 2.4% in late 2010 from about 11% mid-year. Food price inflation in the high teens soured moods further. To curb inflation, the central bank doubled the short-term interest rate to about 7% with successive raises. Fearing a broader slowdown, foreign investors sold a net $1 billion worth of stocks in January.
But a 23% correction is a good time to buy what is otherwise a solid economic story. Growth is expected to hold near 8 to 9%. Inflation, including food, is coming down. The 2011 Budget, due 28 Feb, is expected to show improved government finances, partly due to a big sale of wireless telecom rights. Export growth of 36% in 2010 has shrunk the trade deficit to $2.6 billion from nearly $12 billion a year ago.
|52 Week High||28.68|
|52 Week Low||20.33|
|Avg Daily Volume||3.05 Million Shrs|
|Avg Daily Volume ($)||$67.20 Million|
|Total Market Cap||$1.56 Billion|
|ETF Annual Fee||0.0088|
|ETF Trading Currency||USD|
|ETF FX Exposure||INR|
|Correlation to S&P 500||79%|
|Return to Risk Ratio||Not Available|
|Use of Leverage||No|
|Use of Futures||No|
|6 month Return||-7%|
|1 Year Return||+7.6%|
|2 Year Return||+108%|
|3 Year Return||Not Available|
|Dividend Yield (TTM)||0.64%|
Disclosure: I am long EPI.