Anyone who’s been watching the news on Tata Motors (TTM) is feeling pretty frustrated right now. I have the urge to wail every time I look at our loss on the stock. We’re sitting at 40% down, although, many of you may have hit your stop loss a while ago and sold out.

If not, you may want to sell your shares and buy back when TTM finds a bottom. But I’m in the stock for the long-term. And I think Tata can dig itself out of this hole.

Here is a list of the best performing American Depository Receipt [ADR] stocks Year-To-Date:

By Jason Simpkins

At a price of just $2,500 each, Tata Motors Ltd.’s (TTM) Nano was billed early in its development as the world’s cheapest automobile and the only car that was both affordable and practical enough for India’s quickly burgeoning middle class. But the car that was emerging as a bright symbol of middle-class opportunity in fast-growing India could now epitomize something much darker: The human cost of rapid industrialization.

The markets Wednesday welcomed a change in India's top central banker while lamented another unexpected change in Japan's premiership.

Mr. Yasuo Fukuda, Japan’s (EWJ) prime minister, on Monday night shocked even his own party by abruptly resigning after less than a year in office, paving the way for possible snap elections in the world’s second-largest economy which is facing a sharp slowdown in its growth.

An Infosys (INFY) executive reiterated that the offshore outsourcing business is holding up amid an economic slowdown, and outlined plans to continue to move up the technology food chain to offer consulting services.

Speaking at the Citigroup Technology Conference in New York, Ashok Vemuri, head of banking and capital markets at Infosys, said the company plans to advance its GDM (global delivery model), which highlights new capabilities such as software as a service and consulting engagements instead of the previous core business of delivering applications and code.

A few a days ago I read an interesting post titled “50 SPX Stocks Down > 50%” in “The Big Picture” site.That article inspired this post where I analyze the performance of 43 foreign banks since the October 2007 peak.

I followed these rules for this study:
a. Take the highest intra-day high reached in October 2007 as the peak.
b. If a stock reached higher price before or after October ignore it.
c. Include bank stocks listed in the OTC market as sponsored ADRs.

Here is the list of currency ETFs filed for by WisdomTree, according to IndexUniverse:

• WisdomTree Dreyfus Chilean Peso Fund
• WisdomTree Dreyfus Czech Koruna Fund
• WisdomTree Dreyfus Hong Kong Dollar Fund
• WisdomTree Dreyfus Hungarian Forint Fund
• WisdomTree Dreyfus Israeli Shekel Fund
• WisdomTree Dreyfus Icelandic Krona Fund
• WisdomTree Dreyfus Indonesian Rupiah Fund
• WisdomTree Dreyfus Malaysian Ringgit Fund
• WisdomTree Dreyfus Mexican Peso Fund
• WisdomTree Dreyfus Norwegian Krone
• WisdomTree Dreyfus Polish Zloty Fund
• WisdomTree Dreyfus Russian Ruble Fund
• WisdomTree Dreyfus Singapore Dollar Fund
• WisdomTree Dreyfus Swedish Krona
• WisdomTree Dreyfus Swiss Franc Fund
• WisdomTree Dreyfus Taiwan Dollar Fund
• WisdomTree Dreyfus Thai Baht Fund
• WisdomTree Dreyfus Turkish Lira Fund
• WisdomTree Dreyfus BRIC Currency Fund
• WisdomTree Dreyfus Developed Currency Fund
• WisdomTree Dreyfus Emerging Asia Currency Fund
• WisdomTree Dreyfus Emerging Europe Currency Fund
• WisdomTree Dreyfus Emerging Latin America Currency Fund
• WisdomTree Dreyfus Gulf Currency Fund
• WisdomTree Dreyfus Oil Exporters Currency Fund

That is some list.

In the second quarter of 2008 (the first quarter of the financial year) India’s economy grew at it slowest rate in three years, as the Reserve Bank of India struggles to control record high inflation by applying tight credit conditions. Annual growth slowed to 7.9 per cent in the quarter of 2008 which ended on June 30, significantly lower than the 8.8 per cent rate reported for the January to March quarter. Click to enlarge:


Growth momentum has obviously been slowing on tighter monetary policy and the adverse global environment. Higher interest rates, slower bank credit growth and higher oil and commodity prices are evidently now having a marked effect on activity levels in the Indian economy. However, in spite of the slowdown, the growth rate of Asia’s third largest economy remains strong, and there are very positive signs of resilience in the face of what is now a global economic slowdown. China’s economic growth also slowed in the second quarter dropping to a 10.1 per cent year on year rate, from 10.6 per cent in the first quarter.

“Despite their fantastic recent growth record, investors need to be very cautious about emerging markets,” says chief investment officer Eric Bushell in CI Funds’ latest Perspective Online. Their growth momentum is posed to decelerate due to high commodity prices and slippage in export growth as developed economies slow down.

India's inflation shot up again at the start of August and hit a 16-year high of 12.44% in the week to Ausust 2, following a 12.01% increase in the previous week, according to data from the Commerce Ministry. Concerns have also been raised that inflation may accelerate further after the government approved sizeable wage increases (in the region of 21%) for civil servants. Click to enlarge:


The Indian cabinet yesterday approved an average 21 per cent pay rise for 5m federal employees and military personnel. This is effectively the first revision of government salary scales for 12 years. P. Chidambaram, finance minister, said on Thursday that the civil servants’ pay rise, to be backdated to January 1 2006, would cost Indian taxpayers $3.6bn (€2.4bn, £1.9bn) this fiscal year, including part of the arrears from 2006. Separately, Indian Railways will have to pay $1.5bn to its employees.

A growing middle class in India and China are singled out as the largest growing consumer segment of gasoline worldwide. It also happens that it is in China and India where you can find the world's cheapest cars. The highly anticipated Nano, known as the "People's Car", from India's Tata Motors (TTM), is the world's cheapest automobile starting at just $2,500.00 and China boasts a $5,000.00 car from Chery Automobiles sold only in China. Why do the world's cheapest cars come from the two countries with fastest "growing middle class"? Why doesn't this growing middle class go out and buy a shiny new BMW or Mercedes?

Wal-Mart Seeks Expansion In Brazil, Taking ETF Shopping

Wal-Mart (WMT) is looking to expand in Brazil, where it is the third-largest retailer, in hopes that Brazilians will shop till they drop.

Wal-Mart is looking to invest $1.1 billion into the country in 2009, which is up 50% they planned to spend this year, reports Fabiola Moura for Bloomberg. This will be the largest investment endeavor since the company entered the country in 1995.

India can be a nasty place to invest. Government bureaucratic nightmares that make ours seem paltry in comparison. Corruption, swindling, frequently changed regulations to suit political whims: check, check and check. Buying the Indian market through an ETF or sector mutual fund was popular - until the market hit the skids.

One stock I like now (other than ICICI Bank (IBN)) is Dr. Reddy's Labs (RDY) as an ADR. This rather oddly named company is a diversified and aggressive pharmaceutical company with a presence in over one hundred countries. RDY has seen its share price have ups and downs, but I believe that now is a good time to enter the security with a target price of $34/share. Presently RDY trades at $14.76 with a market cap of $2.5b. As its 52-week high has only been slightly north of $18/share, one could question my sanity at making a bold calculation of a future price two years or less hence.

The US stock markets have been downright boring on a 10-year basis, while the BRIC countries have left the US in the dust in the last several years.  The recent turn of the tables on the emerging markets is so severe that YTD 2008, the US markets are stronger than Russia, India and China, and just barely behind Brazil.

click image to enlarge

Infosys (INFY) and Wipro (WIT) are quoting at around 16x forward, and twice have even gone down to 13.5x forward.

This chart shows that there is no valuation premium for India’s IT leaders over the rest of the Indian market. Is that fair? Perhaps not. While other sectors like real estate and construction, capital goods and so on powered the last bull market, it does appear fair to say that India’s finest companies should command no valuation premium to the market.

Sector Analysis: ICICI Bank (IBN) is India’s largest private sector bank - it belongs to the International Banking group. Oflately, fortunes of international banks have been tied to the US financial sector; IBN’s correlation to Financials SPDR (XLF) in the past six months is 0.86. In simple terms, IBN traded in-line with the US financial sector for the past six months and dropped by 50%; underperforming India’s BSE Sensex which fell by 15% during the same period.

There are many reasons for IBN’s decline but a major influence has been the issues facing the US banking sector. So, the obvious question that investors have regarding banking stocks is: “what if the story of US banks' asset write downs and earnings losses is repeated in emerging markets such as India?” However, there are a few subtle differences between Indian banks and their US counterparts that make Indian banks less likely to follow the same path.

India’s latest run of strong economic growth and continuing macroeconomic stability is a tribute the important progress made in recent years in macroeconomic management techniques as well as to an earlier generation of structural reforms. India’s economy has now expanded at an average rate of about 8½ percent for four years running, on the back of rising productivity and sustained investment. Inflation after ebbing in the second half of 2007 has now returned in full force and become one of the most pressing macro problems facing the Indian economy.

In fact, the record capital inflows which have followed the bout of global financial turbulance and a slowing U.S. economy, while in the long run beneficial, have only served to complicate the application of sound monetary policy. The current account deficit, which had remained modest, is now – on the back of high oil prices, heavy external energy dependence and a growing fiscal deficit – in danger of becoming a matter of concern.

After my last two articles regarding the impending fall in Indian gold consumption, there has been a flurry of emails. Frankly I am surprised by the response. I did not know so many people out there would be interested in Indian gold consumption. Now I stand corrected.

Since it is difficult to give response to so many individuals, I would try to address them openly. It is easy to do so since most of the emails are loaded with common questions like "Wouldn't the agriculture economy pick up soon?", "Why does Indian economy look suddenly so bad?", and "Wouldn't the Indian stock market rise soon to its former glory?"