Is the Indian Market Becoming Overheated?

Sensex, India’s Benchmark Index, is up 33.60% YTD. However, about 30% of those gains have come during the last 8 weeks. Overheated?

Also, I just noticed that the one stock that no one talks about (including me) is the Telecom Giant Videsh Sanchar Nigam Limited (VSL). VSL is up about 44% YTD.

The Indian markets have mostly been driven by Indian Stocks not listed here in the United States. The only US listed stocks that have participated in this run are ICICI Bank (IBN), HDFC Bank (HDB), newly listed Sterlite (SLT) and Videsh Sanchar Nigam Limited (VSL).

Investors who put their money in the Indian ETF, IPATH ETNS (INP), have done pretty well with YTD gains of 54%. Obviously, INP gives you exposure to the overall Indian market.

The two Indian closed end funds, IIF and IFN, are trading at about a 10% discount to NAV even after their recent run. It seems pretty obvious that investors prefer INP over IIF and IFN.

Indian Stocks Weekly and YTD Price Change - Week ending October 12, 2007

click to enlarge

Disclosure: I don’t have a position (long or short) in any of the stocks listed above. Subject to change anytime.

Comments

[Thermodynamix]

What about MINDX - Mathews India Fund - how do you rate its performance relative to IFN or IIF?

[User 39045]

VERY INFORMATIVE;AM GLAD TO SEE SOMEONE IS RECOGNIZING THE HIDDEN GEM STERLITE.SLT DOES NOT APPEAR AS AN ADR ON MAJORITY OF SITES. KEN

[User 39045]

VERY INFORMATIVE;AM GLAD TO SEE SOMEONE IS RECOGNIZING THE HIDDEN GEM STERLITE.SLT DOES NOT APPEAR AS AN ADR ON MAJORITY OF SITES. KEN

[Mittal_911]

what happened to the comment I entered about IIF. You did not calculate the return correctly. IIF and IFN had a substatial cash and divident distribution.

[HimanshuPandya]

I didn't include dividends in my calculation. Thanks for pointing it out. I will put that as a disclaimer from now on.

[Mittal_911]

It was not just dividend alone, there was a hefty distributions from IIF on the order of 15%, which you should not be ignored. Otherwise the comparison would not be fair.

Thanks for presenting the info here!