The Indian government hinted at winding up fiscal stimulus initiatives and cutting back on loose monetary policies, writes Arun Prabhudesai for Track.in. Demand has been on the rebound and the benchmark inflation index has also risen. (Why India is moving up).

Prime Minister Manmohan Singh believes that stimulus efforts will be eased because of very clear signs of recovery in the Indian economy. The Royal Bank of India governor has also opined it appropriate for the Central Bank to incrementally reduce the monetary stimulus.

India’s entrepreneurial momentum is continuing to grow, with a large, under-30 populace that is low on experience but eager to take risks, comments Sramana Mitra for Forbes. For instance, Sridhar Vembu, CEO of Zoho, built a $60 million company that has become competitive in the worldwide arena and he did it with no outside financing. (Possible India small-cap ETF).

For more information on India, visit our India category.

• PowerShares India (NYSEArca: PIN): up 73.6% year-to-date

• WisdomTree India Earnings (NYSEArca: EPI): up 90.4% year-to-date

Max Chen contributed to this article.

Van Eck has registered with the Securities and Exchange Commission (SEC) for a new India small-cap ETF, reports Cinthia Murphy for IndexUniverse. The Market Vectors India Small-Cap ETF will seek to reflect the performance of the Market Vectors India Small-Cap Index. Potential investors should note that the fund will invest in the more volatile aspects of an already volatile equities market.

There are currently three ways to gain exposure to India’s economy: WisdomTree India Earnings Fund (NYSEArca: EPI), PowerShares India (NYSEArca: PIN) and iPath MSCI India Index (NYSEArca: INP). PIN and INP have exposure to large-caps; EPI has 20% weighted in mid-caps and the rest of its exposure is in large-caps.

India’s Finance Minister Pranab Mukherjee stated that the economy is recovery, albeit a slow one, according to RTTNews. The Prime Minister is for a rational interest rate policy moving along with fiscal measures to nurture the economy.

The Reserve Bank of India has adopted a soft monetary policy, issuing banking sector funds to aid the economy.

SBI Chairman O P Bhatt expects a 7% expansion in fiscal 2010, while RBI Professional forecasters revised their forecast downward to 6%, according to Outlook India. (Why India is moving up).

On the upside:

• Companies will likely ask banks for working capital loans as the IPO market picks up, which would help revive the economy
• The auto and infrastructure industries are seeing more demand
• Industrial production is up
• Business confidence is on the optimistic side
• Stock markets are strong

On the downside:

• Private consumption demand is slowing
• The first quarter showed a decline in corporate sales
• A weak monsoon season has hurt agricultural output
• Credit growth is low
• Exports have dipped

• PowerShares India (NYSEArca: PIN): up 64.2% year-to-date

• WisdomTree India Earnings (NYSEArca: EPI): up 78.7% year-to-date

Max Chen contributed to this article.

Turkey. Turkey is rapidly developing and there’s no indication that the economy needs aid from the International Monetary Fund (IMF). Growth in the economy could likely accelerate in 2011 after a return to growth in 2010. Turkey’s market index has been driven up by the banking sector, which makes up around 40% of the market. Bank earnings have been bolstered by a series of rate cuts that have reduced interest on customers’ deposits as lending rates remain high. (Does Turkey need more support?)

• iShares MSCI Turkey Invest Mkt Index (NYSEArca: TUR): up 179% since low; up 101.6% year-to-date

Russia. Next year’s growth could top 2% if oil prices stay high. Greater revenues from taxes on energy companies could also ensure this year’s budget deficit is smaller than expected. Economists believe Russia’s GDP growth may gain a foothold as soon as the fourth quarter because of fiscal stimulus. Additionally, the economy will pick up speed once oil prices increase and world economies recover. The Russian economy is dominated by resources and banking. (Russia’s potential stumbling blocks).

• Market Vectors Russia (NYSEArca: RSX): up 161% since low; up 139.5% year-to-date

Brazil. Brazil could sustain average annual economic growth of 5% over the next 10 years. Low inflation and sound fiscal policy have released a tide of investment in Brazil. For now, Brazil’s small-caps are benefiting from the carry trade. Companies are hiring workers to meet growing demand for manufactured goods and new homes. In 2010, Brazil’s economy is expected to grow 4.4%; this year, growth is expected to be around 0.12%. (Seven things to like about Brazil).

• iShares MSCI Brazil Index (NYSEArca: EWZ): up 125% since low; up 114% year-to-date

India. The Indian Prime Minister’s Economic Advisory Council expects the GDP to expand 6.5% to 6.75% in 2009-10, despite a potential decline in agricultural output. Inflationary concerns may be met by tighter monetary and fiscal policies in the coming months. Factors such as capital flows, domestic demand, portfolio flows and a strong savings rate have India in a good position to continue moving forward. (Why India could strengthen).

• WisdomTree India Earnings (NYSEArca: EPI): up 138% since low; up 88.2% year-to-date

Indonesia. A young population and a falling birth rate equate to a surge in the ratio of working population to the number of dependents. Circumspect fiscal policy has left the government with enough cash for infrastructure and public services. Indonesia may enjoy a period of political stability and does not rely too heavily on exports. Declining interest rates have helped boost consumption, which is around 60% of GDP. (Five points in Indonesia’s favor).

• Market Vectors Indonesia ETF (NYSEArca: IDX): up 180% since the low; up 155.6% since Jan. 20 inception

Max Chen contributed to this article.

• The Indian Prime Minister’s Economic Advisory Council expects the GDP to expand 6.5% to 6.75% in 2009-10. This is despite a potential decline in agricultural output, which may diminish 2% because of a short rainy season.
• Inflationary concerns may be met by tighter monetary and fiscal policies in the coming months, according to The Economic Times. Finance Minister Pranab Mukherjee believes reducing the government stimulus, however, may be premature. Wholesale price inflation may reach 6% by March of 2010 from the current rate of about 1%. The projected consolidated fiscal deficit is 10.09% for 2009-10.
• One factor contributing to the new forecast include a strong industrial sector, growing at its fastest pace in 22 months in August.

Chakravarthy Rangarajan, a top aide to the Prime Minister, says the monetary policy should remain “accommodative” and interest rates should be left unchanged to ease the economic recovery, report Kartik Goyal and Cherian Thomas for Bloomberg. Early signs of inflation could force India to act early on interest rate changes.

For more information on India, visit our India category.

• PowerShares India (NYSEArca: PIN): up 75.7% year-to-date

• WisdomTree India Earnings (NYSEArca: EPI): up 90.7% year-to-date

Max Chen contributed to this article.

According to Don Dion for The Globe and Mail, he’s chosen his top five ETFs based on the fact that he feels they capture their theme, provide liquidity and exploit the advantages of the ETF model. This is by no means a conclusive list – there are many, many worthy ETFs out there.

These five ETFs address important themes in the financial world of today:

Biotech. iShares Nasdaq Biotechnology (NasdaqGM: IBB) is up 11% year-to-date. Biotechs include many start-up companies that burn out, but a lucky few do strike it rich. Instead of shifting through all the possible companies, the ETF offers a great way to pick up the sector.

TIPs. iShares Barclays TIPS Bond (NYSEArca: TIP) is up 7.1% year-to-date. This fund tracks securities that range in duration from one to 20 years. Indiividual TIPs bonds are taxed on inflation adjustment and TIP distributes inflation-adjustment as income.

India. WisdomTree India Earnings (NYSEArca: EPI) is up 85.8% year-to-date. The fund offers access to the Indian equity market while allowing for the limitations that foreigners might have on investing. Potential investors should note that emerging market equities tend to be more volatile.

Gold. SPDR Gold Shares (NYSEArca: GLD) is up 15.4% year-to-date. Gold has been the talk of the markets these days. Buying gold is a good way to diversify a portfolio. GLD tracks the price of gold stockpiles, so investors won’t be tracking the price through derivative holdings.

S&P 500. SPDRs S&P 500 (NYSEArca: SPY) is up 16.7% year-to-date. The fund has been providing low-cost exposure to the S&P 500. SPY is a good proxy for the market as a whole and Dion believes it to be a must-have fund for any well-rounded ETF portfolio.

Max Chen contributed to this article.

For full disclosure, Tom Lydon’s clients own shares of GLD and SPY.

India remains an attractive investment location despite slow economic growth this year. Factors such as capital flows, domestic demand, portfolio flows and a strong savings rate have India in a good position to continue moving forward, reports Abhrajit Gangopadhyay for The Wall Street Journal.

India’s economy grew 6.1% from a year earlier in the April-June quarter, higher than a 5.8% expansion in the preceding quarter, thanks to government efforts. The Asian Development Bank has revised its growth projection for India up to 6% from an earlier 1%-5% for 2009. The revision is based on the fact that public spending has gone up, industrial production is rising and there are signs of better business confidence, reports The Economic Times.

• PowerShares India (NYSEArca: PIN): up 69.8% year-to-date

• WisdomTree India Earnings (NYSEArca: EPI): up 83.8% year-to-date

For more stories about India, visit our India category.

Most ETFs passively track indexes, and those indexes generally have a strategy as to how its components are weighted. “Weighting” refers to the way stocks are distributed within a portfolio, Ron Rowland for Money and Market explains. For example, in one index, a company might make up 10% of the overall portfolio while in another index that’s constructed differently, the same company could make up just 1% of the portfolio.

Providers of ETFs have developed alternative weighting schemes that can be useful, especially if there is reason to believe that certain companies are going to outperform others. Here is a rundown:

Equal weight: This is a simple approach – divide the money between all the stocks weighted within the index equally. If an index has 50 stocks, each one represents 2%.

• SPDR S&P Biotech (NYSEArca: XBI)
• SPDR S&P Semiconductor (NYSEArca: XSD)

Dividend & Earnings Weighted: WisdomTree is the master of this method. These are for income-loving investors who want to own companies that have a record of growing their dividends. The indexes are measured, or weighted, by  fundamental factors such as dividends and earnings. The provider says that this method can lead to better long-term results.

• WisdomTree India Earnings (NYSEArca: EPI)
• WisdomTree Dividend minus Financials (NYSEArca: DTN)

Revenue Weighted: Simply put, stocks within the index are weighted according to revenue. Over time, the results should yield good returns.

• RevenueShares Small Caps (NYSEArca: RWJ)

Fundamentally Weighted: A number of factors go into fundamental weighting, including book values, sales, dividends and cash flow.

• PowerShares FTSE RAFI US 1000 (NYSEArca: PRF)
• PowerShares FTSE RAFI Emerging Markets (NYSEArca: PXH)
  

For more stories about indexing, visit our indexing category.

Right after last year’s financial collapse, India’s growth was around 5.8%, which was the average growth for about 25 years before India saw fast-paced growth, remarks T N Ninan for rediff Business. Now, India is expected to report 6% growth for the year despite suffering a drought on top of a industrial recession.

According to Tony Sagami at Uncommon Wisdom, India is growing the most in these areas:

• Electricity consumption is up 6.2%
• Manufacturing is up 3.4%
• Mining and financial services are up 7.9% and 8.1%, respectively
• Government spending rose to 9.9% of GDP (up from 9.6% in the same period last year)

Once India rebounds from a poor crop year and resumes normal economic growth, the economy might see an average 8.5% growth per year. The Planning Commission is projecting an 8.5% growth for at least the next year and for the year after.

As the impact of fiscal stimulus comes to fruition, 80% of India’s companies are becoming more optimistic about recovery and growth  performances in the coming months, according to rediff Business. But a majority of participants feel that high fiscal deficit and massive borrowing could result in higher interest rates.

• WisdomTree India Earnings (NYSEArca: EPI): up 75.8% year-to-date

• PowerShares India (NYSEArca: PIN): up 63.4% year-to-date

For more information on India, visit our India category.

Max Chen contributed to this article.

India’s Meteorological Department has estimated rainfall during the monsoon season this year will be substantially below the long-term average. This is going to  damage existing crops and reduce future plantings. The government has stepped in, however, and will rely upon imported food to even out the supply and demand equation, report Mukesh Jagota and Abhrajit Gangopadhyay for The Wall Street Journal.

Rainfall is around 26% below average, and the full impact of this won’t be known until the harvesting starts. In turn, rising food costs have surfaced, and the possibility of huge government borrowing may crowd out long-term investment, which poses major challenges for India’s economic rebound.

Kartik Goyal and Cherian Thomas for Bloomberg reports that India this month signed a free-trade accord with South Korea and the 10-member Association of Southeast Asian Nations as it attempts to reduce dependence on the recession-hit U.S. and Europe. India depends on these countries for about 40% of merchandise exports.

New markets in Africa and Latin America are being explored, as India is also extending a tax refund to exporters.

• PowerShares India (PIN): up 57.2% year-to-date



• WisdomTree India Earnings (EPI): up 68.4% year-to-date

For more stories about India, visit our India category.

India’s OFDI until recently outpaced that of other emerging markets, but it hit a roadblock when the global financial crisis began.

India’s OFDI recovery will rely upon the revival of global and domestic growth, improvements in corporate profitability and easing of financing from banks and equity markets, writes Jaya Prakash Pradhan for Business 24-7. Before 2008, Indian OFDI was driven by global growth, business opportunities and increased competition.

The factors that have impeded OFDI include:

• The global and domestic slowdown has led to diminished business confidence, reduced consumption and sluggish investments, which has halted overseas and domestic expansion of Indian companies.
• India adopted a cautious lending policy during the credit crunch, which led to postponements in domestic and overseas projects.
• The global downturn had a negative impact on Indian equity, money and foreign-exchange markets. The depreciation of the Indian rupee against the U.S. dollar last year led to losses in export-oriented Indian companies that had long-term forex derivatives.
• A slump in export earnings affected companies in software, gems and jewelry, leather, textiles, auto parts, pharmaceuticals and food processing.

Overseas acquisition trends in January-June 2009 compared to same period last year has declined by 65%, or from $8 billion to under $3 billion. The drop in Indian investment is widespread among recipients. In host regions, the decline in Indian brownfield investment was most notable in the developing world.

India’s overseas investments began with information technology and related service sectors. It then spread to areas of manufacturing and finance, India One Stop reports.

• WisdomTree India Earnings (EPI): up 56.2% year-to-date

• PowerShares India (PIN): up 50.4% year-to-date

For more information on India, visit our India category.

Max Chen contributed to this article.