Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Why Most Investors LOST Money by Investing in ARK FUNDS - 27th Jan 22
The “play-to-earn” trend taking the crypto world by storm - 27th Jan 22
Quantum AI Stocks Investing Priority - 26th Jan 22
Is Everyone Going To Be Right About This Stocks Bear Market?- 26th Jan 22
Stock Market Glass Half Empty or Half Full? - 26th Jan 22
Stock Market Quoted As Saying 'The Reports Of My Demise Are Greatly Exaggerated' - 26th Jan 22
The Synthetic Dividend Option To Generate Profits - 26th Jan 22
The Beginner's Guide to Credit Repair - 26th Jan 22
AI Tech Stocks State Going into the CRASH and Capitalising on the Metaverse - 25th Jan 22
Stock Market Relief Rally, Maybe? - 25th Jan 22
Why Gold’s Latest Rally Is Nothing to Get Excited About - 25th Jan 22
Gold Slides and Rebounds in 2022 - 25th Jan 22
Gold; a stellar picture - 25th Jan 22
CATHY WOOD ARK GARBAGE ARK Funds Heading for 90% STOCK CRASH! - 22nd Jan 22
Gold Is the Belle of the Ball. Will Its Dance Turn Bearish? - 22nd Jan 22
Best Neighborhoods to Buy Real Estate in San Diego - 22nd Jan 22
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
WARNING - AI STOCK MARKET CRASH / BEAR SWITCH TRIGGERED! - 19th Jan 22
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

India Investing: How to Play the Pullback

Stock-Markets / India Mar 19, 2012 - 09:40 AM GMT

By: Yiannis_G_Mostrous

Stock-Markets

Best Financial Markets Analysis ArticleIndia is a global business hub that consistently ranks as one of the world’s fastest-growing economies. From its dense, over-crowded metropolitan centers to its dirt-road villages and sparsely populated outreaches, India is a hotbed of diversity, culture and innovation.


India also has been one of the world’s top emerging markets in 2012, which has prompted investors to take some profits off the table.
Indian equities aren’t as cheap as they were in late 2011. But there’s room for upside, should company earnings meet or exceed low expectations. A new earnings upgrade cycle could propel this Asian stock market higher, absent a huge surge in oil prices.

That being said, a clear slowdown in India’s economy invites questions about the sustainability of the market’s upward trend, particularly in light of elevated oil prices.

Expensive crude is a sticking point for India because the government still subsidizes fuel, an effort equivalent to 1.3 percent of gross domestic product (GDP). Higher oil prices exert inflationary pressures on the Subcontinent, although the impact, at least at the headline statistical level, is mitigated by the fact that oil accounts for only 10 percent of the country’s inflation basket.

Still, India’s relatively weak fiscal and current account positions—3 percent and 6 percent of GDP, respectively— make higher oil prices a legitimate worry that can’t be ignored.

Inflation, historically a problem for India, has improved. The latest numbers show that inflation grew 6.6 percent in January, down from 7.5 percent in December. Moderating food prices and softer demand have combined to cage the inflation beast. If inflation remains contained, the Reserve Bank of India will be more comfortable cutting rates and lowering reserve requirements to support economic growth.

India’s government debt is about 71 percent of GDP. Financing this debt remains a dilemma, one made only more difficult by higher oil prices. Ninety percent is owed to domestic creditors, which means India is relatively immune to the whims of foreign investors.

Encouragingly, India’s typically fractious politicians have set aside their differences long enough for the central government to fast-track power- related infrastructure projects in an effort to jump-start an investment cycle and push economic recovery.

The Indian economy is oriented toward domestic demand, buttressed by steadily rising incomes and a relatively healthy banking system. The population is growing rapidly, and the exploding Indian middle class is quickly becoming brand-conscious and purchasing more modern amenities.

India also is home to growing ranks of technology-savvy, collaboration- minded young professionals who are infusing the old school methods of business with fresh thinking. They grasp the nuances of outsourcing methodologies, combining their insights with high levels of education and an excellent command of English. Indian business leaders are developing a reputation as globally focused, pragmatic and conscientious.

Per capita income has almost doubled since 2006 and is expected to reach $2,000 sometime in the next three years. (See “Living Standard on the Rise.”) As a result, services now represent about 59 percent of GDP and employ around 25 percent of the population. Given that exports remain on the back burner, any prolonged failure to reignite domestic demand could have serious consequences for India’s short- and medium-term future.

HDFC Bank (Mumbai: HDFCB, NYSE: HDB) is one of India’s biggest private banks, with 2,200 branches and 15 million retail clients. It’s among the top two or three players in all consumer loan segments except mortgages. Although HDFC Bank’s stock trades at a premium to its peers, the financial institution’s strong domestic position and its consistent delivery of solid operating results warrant a higher valuation.

HDFC Bank is a big beneficiary of demographics: India is a nation of young people with rising incomes who are driving consistent domestic demand. The company has substantial room to grow in a financial services market that remains remarkably underpenetrated.

Most of HDFC Bank’s new branches are located outside metropolitan regions that are ripe for service by the banking industry. HDFC Bank and others have turned a regulatory mandate into opportunity, because it has allowed them to attract more accounts from smaller towns. About 62 percent of the firm’s branches are now outside India’s nine biggest cities.

I consider HDFC Bank as a top growth stock. It is one of Asia’s best- run financial institutions, and management has a strong track record of producing steady growth without incurring excessive risk.

By Yiannis G. Mostrous
Editor: Silk Road Investor, Growth Engines

http://www.growthengines.com

Yiannis G. Mostrous is an associate editor of Personal Finance . He's editor of The Silk Road Investor , a financial advisory devoted to explaining the most profitable facets of emerging global economies, and Growth Engines , a free e-zine that provides regular updates on global markets. He's also an author of The Silk Road To Riches: How You Can Profit By Investing In Asia's Newfound Prosperity .


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in