India ETFs Sink As Investors Go Elsewhere

February 25th at 12:00pm by Tom Lydon

The ebb and flow of foreign investment in India is starting to ebb and investors who once turned to this economy and its exchange traded funds (ETFs) have turned elsewhere.

Vikas Bajaj for The New York Times reports that foreign direct investment in India fell more than 31%, to $24 billion, in 2010 even as emerging markets as an asset class remained attractive. [India ETFs and the Emerging Market Rebound.]

Also of mention, foreign investors took $1.4 billion out of the Indian stock market, driving the country’s Nifty 50 index down 17% from a record high set in November. Behind the outflows are rising inflation, which is currently at 8.2%, and an inefficient bureaucracy are other obstacles that the economy must overcome. [Why India ETFs Are In a Rut.]

Jahangir Aziz for The Wall Street Journal reports that India isn’t taking the outflows lying down. New Delhi’s state budget meeting will take place on Mnday, and the latest threats to growth for the country will dominate the conversations.

PowerShares India (NYSEArca: PIN) and WisdomTree India Earnings (NYSEArca: EPI) have been on a general downtrend for several months. The only India ETF doing well these days, naturally, is the Direxion Daily India Bear 2x Shares (NYSEArca: INDZ), which is up 15% in the last month.

Tisha Guerrero contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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