Tuesday, May 23, 2006

Indian stock market and investing in India

In the previous article, we looked at the different mutual funds that invest in India and compared some of them. In the past week, the Indian stock market corrected itself where it declined from the 12,000 level to the 10,000 level. So the question at the moment is if this is a good time to invest in the Indian markets.

According to etfconnect.com, as of 5/19/2006, IFN is trading at a premium 31% to the NAV. IFN is currently trading around $47, a 10% decline from the prices in etfconnect.com. Even in the best of circumstances, IFN is still trading at a 21% premium to NAV. 21% is a huge premium to pay to invest in the Indian stock market.

IIF on the other hand, is selling for a premium of 2.45% to its NAV as of 5/22/2006. If one has to go for ETFs, IIF is clearly the better choice at the moment. Today IIF increased by nearly 5% whereas the Indian stock market increased in value by about 3%.

MINDX, Mathews India Fund, is clearly the best of the pack. Not only is there no premium associated, the expense ratios are reasonable.

ETGIX, Eaton Vance Greater India Fund. The fund carries an expense ratio of around 2.5% but the expense ratio varies from year to year. This doesnt include the front load fee that is charged for the fund. The front load fee varies from 5% to 0% depending on the money invested. While the fund is a better choice than IFN, currently it looks as though IIF and MINDX are better choices. MINDX doesnt carry the premium that IIF carries over NAV and is the best choice in the market at the moment.

That said, it is likely that the market will move sideways for the next few months in the historically slow period of May-October. The future is bright for the emerging markets in general and India in particular for the next three-four years. The current correction in the Indian market is a welcome sign for investors as the market has been showing signs of a bubble.


Anonymous said...

Excellent summary.

IFN also has a huge short position - almost 2 million of shares were short as of May 15. IFN's premium only increased as the Indian SENSEX dropped by 20%, so it is more than likely more shares were shorted (by those who could) by now.

So, investing in IFN now is a definite suicide till the dust settles and the huge premium it unjustifiedly seems to have comes down to earth!

If I currently held IFN, I'd sell it right now and gradually consider moving the money to IIF or MINDX.

prateek said...

Beautiful Blog ! You can Discussing and Earn Stock Market at http://www.onlimoney.com

Anonymous said...

Dear All,

Your blog is nice and informative. We think our post will be quite useful and informative for your visitors. We have witnessed Sensex and Nifty showing quite handsome upward rally around new year time. But now on 2nd Jan again Indian stock marketis sluggish and is struggling to come up. We have posted in recent post that we can expect market to come down in between 26December-07 to
5- Jan-08.

Now on 2nd Jan FII has reentered into the market and game of seesaw with Nifty
graphs has started again.

We advise everyone whether they are working in Indian stock market or any other expect high volatility in all markets as sentiments of one
market effects other.

Always remember less profit or no profit is better then loss


Sharetipsinfo team

Anonymous said...

Dear Visitors,

This Blog is really nice and informative. We are pleased to know this
blog is really helping people. Its our pleasure to post
Informative content on this useful blog created by webmaster.

Again after one week of good gains in Indian stock market we have seen Nifty and Sensex closing very near to there major Support.
If Nifty breaches 4850 then it can again see a fall till 4600. But chances of breaching 4850 is very less. Now world markets are recovering at faster pace
dollar is becoming strong as against Rs. it will give good gains to exporters and IT sector.

Right now Nifty is in consolidation state it can go to any direction. We suggest you not to take too long positions right now.

Please feel free to contact us for any query.

Have a Nice trading days ahead.




www.ShareTipsInfo.com Team said...

Dear Visitors,

This blog is really nice and informative. We are pleased to know this blog is really helping people. Its our pleasure to post informative content on this useful blog created by webmaster.

Time changes and with every passing day graphs of stock market changes which in turn changes the portfolio of investor. Like recent fall in Indian stock market
has ruined the portfolio of investors
who were invested in Nse and Bse
listed scripts. They have lost around say 60% of there money. But now once again after that correction in stock market Nifty and Sensex has picked up momentum. But
we again warns all investors that don’t be too over tempted by this rise as its just a minor upmove. Until Nifty doesn’t close above 5300 for 3-4 sessions we are not at all bullish in market. So invest in market for short term or prefer day trading commonly known as Intraday trading.

Apart from it rising price of Crude oil, Rising Inflation is a matter of concern. Though dollar is becoming stronger that will boost IT sector and Exporters.

All in all we suggest be in Indian stock market and if you are investor invest with the proper strategies like go Long for maximum 1 week that too with proper stoploss and target.
If you are day trader be a strict intraday trader then , clear your goals and trade with strict stoploss and target if you want to earn.




KnowYourProfit said...

This blog is quite nice and informative , we had a pleasure to post a comment on this usefull blog created by the webmaster

Tomorrow i.e. 31st July'08 the day when the Inflation data will come.Inflation from the past successive weeks is keep on increasing,this has now become a major factor deciding the following days movement of Indian Stock Market.RBI and the government is taking steps to control it.Inflation has to be kept under control for the interest of the economy, Indian Stock Market is governed by lots of factors one including them is Inflation that has also to be kept in mind always

Sectors giving good return over period of time includes:


Have a Query ?

Feel free to contact us

Happy Trading



KnowYourProfit said...

This blog is quite nice and informative, it is our pleasure to post a comment on this usefull blog created by a webmaster

Now as such we all know that in India Elections are just around the corner which would inturn effect the movement of the
Indian Stock Market which means the time has come when a common man should start thinking of investing in the Indian Share Market
which would help him to increase the invested amount because one should not avoid the Opportunities come in Daily Life

We welcome your Quieries at