India ETF products continue to roll into 2012 on a positive note. All non leveraged India ETFs are positive for the year. Here is the performance chart from IndiaETFs.com showing year to date results of all India ETF and ETN products.
Indian markets have bounced since the end of 2011
India small cap ETFs - SCIN and SCIF - have continued to be among the leaders of the pack gaining over 20% each. In addition the India Infrastructure ETF - INXX - has gained over 22% for the year joining the small caps at the top. The two largest India ETFs, PIN and EPI have gained 14% and 17% respectively.
Indian markets have been performing well relative to other emerging markets like the BRICs. Here is a performance chart showing the representative ETFs for each country Brazil (EWZ), Russia (RSX), India (EPI), China (FXI). India is the number one performer in 2012.
India has recently been benefiting from a variety of factors. Externally the euro debt crisis has quieted down and reduced the pressure on India's currency, the rupee. Internally India has seen inflation slow down. Hopes are emerging for an interest rate cut by the Reserve Bank of India. The government has also eased its restrictions on foreign investors and over $1.2 billion of foreign inflows have made their way into India after net outflows in 2011. Finally recent earnings numbers by Indian companies have surprised to the upside, encouraging investors.
This coming week, the focus will be on the Reserve Bank of India's quarterly update on monetary policy which happens on January 24th. Most believe that interest rates will remain unchanged but there is hope that a surprise cut could be announced. This could ignite the market further as a cut in interest rates - currently at 8.5% - would increase domestic consumption and business investment. Indian markets, on pace for their best January since 2001, seem to be poised for more gains but still carry significant risk should the EU crisis flare up and investors move toward a risk off mentality.