Could India and its exchange traded funds (ETFs) become the next emerging market to reckon with in the wake of the global economic crisis? The markets today were so positive that circuit breakers were triggered.The stock market in India shot up 17% after the Congress Party’s definitive victory in national elections are setting the tone for long-awaited economic reforms. Erika Kinetz for the Associated Press reports that the Bombay Stock Exchange’s benchmark Sensex vaulted 2,110.79 points, or 17.3 %, to 14,284.21, causing the historic shutdown Monday.
Luciano Siracusano, WisdomTree‘s director of research, said in an appearance on CNBC this morning that these elections could put India in a better position to receive capital with a new political party in office. WisdomTree is the provider of the largest India-focused ETF.
The recent Congress party victory in national elections raised hopes of a revival in foreign direct investment and economic growth, as well as tax reform and significant infrastructure spending. Cherian Thomas and James Rupert for Bloomberg report that Manmohan Singh’s electoral victory is giving hope to half a billion Indians that poverty is not a way of life.
The rupee is up 3.3% so far, the most in more than 20 years.
There are a number of ways to gain exposure to India via ETFs, including as a single country or in a broad BRIC (Brazil, Russia, India, China) ETF, which can help spread the risk among several emerging markets instead of pinpointing just one.
- PowerShares India (PIN): up 19.3% year-to-date
- WisdomTree India Earnings (EPI): up 22.6% year-to-date
- First Trust ISE Chindia (FNI): up 20.2% year-to-date
- Claymore/BNY BRIC (EEB): up 25.6% year-to-date; India is 9.2%; Brazil is 52.8% and China is 18.3%
For full disclosure, some of Tom Lydon’s clients own shares of EEB.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. 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.