Already among the top-performing single-country emerging markets exchange traded funds this year, India ETFs could rally some more as companies in Asia’s third-largest economy start delivering quarterly earnings this week.
While S&P 500 earnings growth for the second quarter is forecast to be 6.2% with some market observers seeing the possibility of significant upside surprises, Sensex-listed firms are expected to post a fourth straight quarter of double-digit EPS growth.
“We expect a continuation in earnings turnaround…this will be the fourth straight quarter of double-digit growth in key metrics of Sensex, underscoring our positive outlook on Indian equities,” said Deutsche Bank, The Economic Times reports.
Impressive earnings by Indian firms should, perhaps predictably, benefit the WisdomTree India Earnings Fund (NYSEArca: EPI). As its name implies, EPI, the largest India ETF, is sensitive to earnings results from India’s largest companies. EPI tracks the WisdomTree India Earnings Index (WTIND), which is weighs constituent companies “based on their earnings in their fiscal year prior to the Index measurement date adjusted for a factor that takes into account shares available to foreign investors,” according to WisdomTree.
Deutsche Bank said “companies in the telecom, oil and gas, information technology services, auto and fast moving consumer goods are expected to report better number,” according to the Economic Times.
Energy and technology are EPI’s second- and third-largest sector weights, combining for 31% of the ETF’s weight while consumer discretionary stocks account for 6.1% of EPI’s weight. EPI has surged 38.5% this year while attracting $377.2 million in new assets. [Dominance by India ETFs]
The PowerShares India Portfolio (NYSEArca: PIN) is another ETF with big exposure to the sector’s Deutsche Bank expects to post solid earnings. PIN, which has soared 31% this year, devotes 43.5% of its combined weight to energy and tech stocks. [PIN-ing India ETFs]
PIN has brought in $82.6 million of its $533 million in assets over the past 90 days, according to PowerShares data.
Over that period, the top-seven U.S-listed non-leveraged ETFs are India funds.
WisdomTree India Earnings Fund