Indian Stocks: Make Money in Them the Easy Way

You can get diversification and access to a huge population with Indian stocks.

Jan 8, 2014 at 3:36PM

Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you'd like to add some Indian stocks to your portfolio but don't have the time or expertise to hand-pick a few, the iShares MSCI India Index ETF (NYSEMKT:INDA) could save you a lot of trouble. Instead of trying to figure out which Indian stocks will perform best, you can use this ETF to invest in lots of them simultaneously.

The basics
ETFs often sport lower expense ratios than their mutual fund cousins. This ETF, focused on Indian stocks, sports a relatively low expense ratio -- an annual fee -- of 0.67%. The fund is fairly modest in size, so if you're thinking of buying, beware of possibly large spreads between its bid and ask prices. Consider using a limit order if you want to buy in.

This Indian stocks ETF is too new to have a track record worth assessing. As with most investments, of course, we can't expect outstanding performances in every quarter or year. Investors with conviction need to wait for their holdings to deliver.

Why Indian stocks?
If you're drawn to China for its massive population of roughly 1.4 billion people, don't overlook India, with about 1.3 billion and a rapidly growing middle class. Adding international stocks to your portfolio is also good simply for diversification's sake, and if you're bullish on India's future, this ETF focused on Indian stocks is worth consideration.

Some Indian stocks had strong performances over the past year. Infosys (NYSE:INFY), for example, surged 34%. The information-technology and consulting specialist, also known for its outsourcing expertise, reports its earnings tomorrow. Infosys is poised to profit from a falling rupee, as that can make American competitors' services more costly in comparison. Infosys's last quarter featured an earnings miss, but solid revenue gains and a positive outlook from management. The stock offers a 1.1% dividend yield.

Many other Indian stocks didn't do quite as well over the last year, but could see their fortunes change in the coming years. Tata Motors (NYSE:TTM) gained just 4%. Tata Motors is India's largest automaker, and also owns the Land Rover and Jaguar brands, which are selling well in China. The company posted strong revenue and profit gains in its last quarter, and seems rather inexpensive, to boot.

HDFC Bank (NYSE:HDB) slumped 13%. The company's revenue has roughly tripled during the past five years, and its net income has quintupled. It may not look like a screaming bargain, with its current and forward-looking P/E ratios in the mid-20s, but analysts at Zacks recently upped HDFC Bank's rating from underperform to outperform, based on its recent results and growing market share in India.

Sesa Sterlite Ltd. (NYSE:SSLT) also shed 13%. It's a subsidiary of Vedanta Resources and, until it was combined with several other Vedanta properties, it was known as Sesa Goa. Sesa Sterlite is in the business of exploring for, extracting, and/or processing oil, gas, zinc, lead, silver, copper, iron ore, aluminum, and more. Its second quarter featured record oil and gas production.

The big picture
If you're interested in adding some Indian stocks to your portfolio, consider doing so via an ETF. A well-chosen ETF can grant you instant diversification across any industry or group of companies -- and make investing in and profiting from it that much easier.

Psst... Bet You Haven't Heard of This Company...
The Motley Fool's chief investment officer has just hand-picked a potential big winner for opportunistic investors, which he details in our new report: 
"The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

Longtime Fool contributor Selena Maranjian, whom you can follow on Twitter, has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information