India ETFs Fall After Latest Rate Hike

September 20th at 9:47am by Tom Lydon

India exchange traded funds on Tuesday were recovering some of their recent losses in the wake of the most recent interest rate hike from the Reserve Bank of India.

India’s central bank has raised interest rates in an effort to stave off inflation. On Friday, the RBI boosted rates by a quarter-point to 8.25%. The bank has boosted rates 12 times in the past 20 months.

Inflation hit its highest rates in 13 months, registering 9.75 in August. [India ETFs Grapple with Inflation]

“The decision clearly points out that the RBI’s top priority is curbing inflation despite concerns about global turmoil,” Indranil Sen Gupta, economist at Bank of America Corp., said on Bloomberg. “There will be pressure on inflation after last evening’s petrol-price increases and the rupee’s depreciation.”

The weak rupee, mixed with higher food and gas prices, are adding to inflation. The rupee lost 5.4% this quarter, in response to investors selling off emerging market shares. [ETF Chart of the Day]

India is the only BRIC-nation to raise rates, as others have either held or cut rates to help support economic growth, reports Kartik Goyal for Bloomberg. Inflation is the highest in India, compared to other BRIC economies. Economic growth is at 7.7% for the second quarter, the slowest rate in the past year and a half.

India-focused ETFs include:

  • WisdomTree India Earnings Fund (NYSEArca: EPI)
  • iShares S&P India Nifty Fifty (NYSEArca: INDY)
  • PowerShares India Portfolio (NYSEArca: PIN)

WisdomTree India Earnings Fund

india-etf-epi

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.