The Smart Money's Favorite Indian Stocks

India, exotic land of saris and chutneys, has always been a popular tourist destination for the more adventurous traveler. But mired in poverty, it is not for the faint of constitution.

However, there's good reason to believe that things are about to get a lot less slumdog and a lot more millionaire.

Consider this: India has seen exceptional economic growth over the past decade, averaging 9% annually. With half of its 1.15 billion population under the age of 25 and 400,000+ university graduates a year, the strength of its workforce renders the country virtually debt-free.

And though they've only just begun to truly enter the Internet age, they're doing it with a vengeance -- their population of Internet users has grown more than 700% since 2000. With the government helping things along, reducing barriers for telecom providers, India's online growth rate is staggering.

What's more, India was relatively unscathed by the 2008-09 recession, and bounced back quickly. Because their economy isn't export-driven, they have a degree of protection from international market fluctuations. And with a middle class larger than the entire population of the United States, there's a great deal of economic activity coming from within. It's not altogether surprising that some experts have gone so far as to proclaim India a better investment than China.

Of course, there's no such thing as a sure thing -- short-term risks are myriad. Business negotiations are notoriously arduous (read: costly), and government corruption not only increases the cost of doing business there, but presents a number of legal and ethical challenges for foreign companies.

Investing in international companies is not without its challenges, but if you can handle the heat, consider adding a dash of Far Eastern spice to your investments.

We've crunched the numbers and identified the stocks that have seen the largest institutional inflows over the past three months -- a sign that they may present some opportunities in the near term. Institutional investors have the resources to send their analysts abroad, to do the on-site research you can't, so it's always a good idea to see where their money is headed.

Here it is: the top four Indian stocks in terms of institutional inflows over the past three months. If you want to access free interactive tools to analyze these ideas, click here.

Interactive Chart: Press Play to see how the market caps of all these stocks have changed over the last two years.

Kapitall's Eben Esterhuizen and Alicia Sellitti do not own shares of any stocks mentioned.