Just like the overall market, Indian ADR’s have struggled since 2008 rolled in.

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The chart below tells us more than the performance of the U.S. listed Indian stocks in 2007. What it tells us is just how strong the Indian economy is and the rise of the Indian consumer.

The companies that targeted the local Indian consumers and the local Indian market emerged as the clear winners in 2007.

BSE Sensex roared back this past week by gaining almost 10% week-over-week. The previous week’s 5% drop didn’t really mean anything as the Indian market is showing no signs of slowing down.

Just look at some of the gains this week.

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.

Some interesting facts about India:

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Key Highlights:

* There was talk about Rediff (Nasdaq: REDF) and Sify (Nasdaq: SIFY) being acquisition targets. I talked about Yahoo’s (Nasdaq: YHOO) potential targets in India back in May when Yahoo’s CEO Terry Semel was visiting India. Sify and Rediff closed the week down so the rumors could have been just speculation. There hasn’t any major acquisitions in the Indian Internet sector (except for eBay buying Baazee.com) but the market is just now maturing.
* JP Morgan initiated coverage on WNS Holding (NYSE: WNS) with an ‘overweight’ rating.
* Dr. Reddy’s (NYSE: RDY) announced the issuance of an additional 1,800,000 American Depositary Shares to the underwriters at a public offer price of U.S.$16.00.
* Tata Motors (NYSE: TTM) monthly sales number finally recovered in November.
* Wipro (NYSE: WIT) will be making bigger acquisitions in the future.

Key highlights:

- The BSE Sensex had another up week. Sensex made another all-time high in the middle of the week but closed the week at 13,703.33, up 2.04% for the week.
- Infosys (Nasdaq: INFY) had a down week for a change. The company announced the pricing of its secondary offering of 30,000,000 American Depositary Shares (ADSs), representing 30,000,000 equity shares (one equity share represents one ADS) at a price of US$53.50 per ADS. The total offering exceeds US$1.6 billion. The stock fell on the news and is near its offering price.
- Sify Ltd. (Nasdaq: SIFY) led the Indian stocks this week with a gain of 9.70%. Sify’s subsidiary received the licensing to offer International Long Distance [ILD] and National Long Distance [NLD]. So what does that mean?
- It seems like every week I say the same thing concerning the two Indian Banks. ICICI Bank (NYSE: IBN) and HDFC Bank (NYSE: HDB) both had another up week.
- There is some talk that ICICI Bank is looking to enter the US Market.

• Dr. Reddy’s Lab (RDY) saw the largest decline among Indian Stocks as the generic drugmaker announced public offering of 12.5 million shares at $16 per ADS. It is believed that the proceeds will be used to clear some debts from an earlier acquisition and for further expansion. Dr. Reddy’s came out with some pretty good Q2 numbers back in October and I am keeping a close eye on this one for now.

• Rediff.com (REDF) closed the week up 9.41% on no real news. By the way, Rediff.com, you are diluting the user experience by force feeding advertisements when a user clicks on a news link. So now the user has to click twice just to go to news story. I am sure this is also artificially boosting your page views as well. You have a better portal then Sify (SIFY) but this new advertising initiative needs to stop.

* The BSE Sensex made another all-time high this week.
* ICICI Bank (IBN) and HDFC Bank (HDB) show no signs of slowing down as both Indian banks continue their strong run.
* Infosys (INFY) is near its 52-week high.
* Rediff (REDF) came out with good 2Q numbers but nothing spectacular. Rediff didn’t fare too well after earnings because the expectations were sky high. However, when you compare Rediff to Sify’s (SIFY) portal division, there is no competition, as Rediff blows away Sify. This is even after Sify’s portal division has multiple websites such as Sify.com, Samachar.com, Sifymax.com, Mumbailive.in and Bangalorelive.in.

Rediff's revenues grew by 53% YoY while net income increased to US$1.50 million from US$0.31 million in the same quarter last year.

Rediff (REDF) gained 12.90% as the company launched its instant messenger in Hindi language. Also, Mr. Ajit Balakrishnan, chairman and CEO, will ring the opening bell at NASDAQ stock market on Monday, October 9th. Sify Ltd. (SIFY) also gained 6.65% despite the fact that that their e-ticketing deal with Indian Railway Catering and Tourism Corporation [IRCTC] wasn’t exclusive. IRCTC will also sell tickets via post offices and State Bank of India’s ATM’s and branches.

It also seems that both Internet companies benefited by the news that Yahoo (YHOO) is looking for acquisitions and/or partnerships in India. According the Business Standard, Yahoo! is in discussions with various Indian companies for partnerships and acquisitions, and a decision is expected in the next 6-10 months.

According to the Internet & Mobile Association of India [IAMAI], at the end of 2005, India had about 38 million Internet users and the number is expected to rise to 100 million users by end of 2008. The current internet penetration in India is barely 5% and will only be 10% by 2008, when it reaches the 100 million mark.

Sify, so far, has been an underachieving company but there is hope for the future. Raju Vegesna (A Silicon Valley based investor and founder of ServerWorks, which was later sold to Broadcom (BRCM)) bought a majority stake (as well as became the chairman) in Sify late last year, igniting a run in the stock from about $5 to the mid teens. Raju Vegesna took over as the CEO in an announcement made on July 18, 2006 and Wall Street reacted negatively, pushing the stock down considerably in recent weeks.

Last year VSL acquired Tyco for $130 million . Tyco has 60,000 km of undersea cable that spans around North America, Asia and Europe. Recently VSL acquired Teleglobe International Holdings. With this $ 239 million acquisition, VSL got Teleglobe's 1,400 wholesale customers and more than 650 enterprise customers. (source: Financial Express).

VSL practically enjoys a monopoly here in India and with these acquisitions, it has started its global expedition. But with this fact too and being the biggest telecom carrier here in India, it is somehow not able to capitalize on its growth and show it on its balance sheet.

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