Forbes columnist John Christy says that the case for investing in India is a no-brainer. He notes that with 4,781 domestic listings, the Bombay Stock Exchange has more stocks to choose from than any other single exchange on the planet. The New York Stock Exchange, by contrast, has about 1,800 domestic listings and the London Stock Exchange has 2,809.
Following are the six stocks that Christy likes -- first, his rationale:
I want to own Indian companies that sell their expertise to the entire world (INFY, WIT and SAY) and companies that sell services that Indian consumers want to buy (HDB, HTX, and SIFY)
Infosys Technologies (NASDAQ: INFY): 'The key to understanding Infosys is to realize that it is not merely an “outsourcing” firm as it is often described in the media. While Infosys spent its early years in the 1980s doing fairly routine tasks such as software re-engineering and application development, it has consistently raised its game by adding services such as technology consulting and business process management. The final piece of the puzzle is management consulting, which Infosys is now pursuing aggressively.'
Wipro (NYSE: WIT) and Satyam Computer Services (NYSE: SAY). Although he doesn’t go into detail in these two companies, Christy thinks they will all be winners along with INFY. He recommends owning all three and holding them “forever,” as Warren Buffett would say.
For the domestic market the following companies are well-positioned to benefit from the growth in India’s middle class:
HDFC Bank (NYSE: HDB): HDFC is a leading mortgage lender.
Hutchinson Telecom (NYSE: HTX): 'Hutchison, though listed in Hong Kong, owns a rapidly growing mobile telecom franchise in India, where only 5%of the population has a cell phone. (Bonus: With HTX you also get exposure to nearly a dozen emerging markets in all, including Vietnam and Indonesia.)'
Sify Corp. (NASDAQ: SIFY): 'Sify is a play on several forms of Internet access. The PC penetration rate in India is very low; about 70% of Internet usage is done in public places. Sify runs a chain of more than 3,100 cyber cafés under the “iWay” brand name in 150 cities across the country. In addition to the cafés, Sify has a portal business and offers broadband access for consumers and companies.'
For investors who prefer funds, he likes Matthews India Fund [MINDX].
John also recommended a book, 'India Unbound' by Gurcharan Das, former chief executive of Procter & Gamble’s Indian operations.