India: BRIC's Middle Child

What is it about being in the middle? The supercool residents of the coasts refer to middle America as
"flyover country." Middle children get lost between the perfect firstborn and the precious baby of the family. Goldilocks was the only one who appreciated the middle ground -- and she was a home-invading juvenile delinquent (and probably a middle child herself).

When it comes to investing in emerging markets, we see the same story. Of the famous BRIC group -- Brazil, China, India, and Russia -- China and Brazil have been hogging the headlines and dominating investors' minds, although not without justification. Since bottoming out a little more than a year ago, these markets have returned 108% and 126%, respectively. Add in America's love-hate relationship with the rising superpower that is China and the tropical allure of Brazil, and it's easy to see why these countries capture the spotlight.

India who?
Meanwhile, India has been given short shrift in the investment media. It might seem ridiculous to argue that a country that's home to nearly 1.2 billion people and a stock market that has doubled since late last October could fly under the radar, but when it has to go up against a big brother like China, you can see how India might fall to the wayside. Home to the planet's third-largest economy (or second-largest, depending on how and when you measure), China is the nation that many people hope will pull the world out of its collective funk.

Beijing's $585 billion stimulus package and the shopping spree among state oil companies PetroChina (NYSE: PTR  ) , Sinopec (NYSE: SHI  ) , and CNOOC (NYSE: CEO  ) have ensnared the minds of those looking for ways to cash in on a recovery.

Moreover, the tense currency situation -- with Beijing's manipulation of the yuan going up against Washington's erosion of the dollar -- has put China on the mind (or at least on the tongue) of nearly every financial pundit.

Brazil, I will argue, is the baby of the BRICs. It holds a special place in the minds of most Americans as the alluring land of Carnival, the Amazon, man-eating piranhas, and now the Olympics (I'd include the Beautiful Game, too, but that's rarely on Americans' minds). Who wouldn't want to put some money into Brazilian stocks if it might mean you have to do some boots-on-the-ground due diligence?

Keep in mind, too, that South America's embarrassment of natural resources is closely tied to the China growth story. Companies such as Vale (NYSE: VALE  ) and Petrobras (NYSE: PBR  ) are positioned to cash in on China's nigh-unquenchable thirst for metals and energy. So you could say Brazil tags along with China wherever it goes.

How can I go Indian?
This isn't to say India doesn't have a deep and rich culture and history and many amazing sights, sounds, and tastes of its own. However, India has managed to remain rather quiet in the investment media. A major part of this low profile, in my opinion, is that it's relatively difficult for individual investors to get Indian stocks.

Currently, only 15 Indian stocks are available on the major U.S. exchanges. Other than multibillion-dollar megacaps such as Infosys (Nasdaq: INFY  ) and ICICI Bank (NYSE: IBN  ) , there just aren't a lot of ways to play the Indian economy. Compare that situation with Brazil, a country with an economy 40% smaller than India's, but with twice as many listings. China offers more than 10 times as many.

An investor looking to increase his or her exposure to India could, however, nearly double the number of stocks available by turning to the over-the-counter exchanges. Of course, with OTC stocks, trading volume tends to be significantly lower. You therefore want to be extra sure about the companies you're investing in, because once you're in, it could take some time before you can get out. But even being sure, let alone extra sure, is tough when you're dealing with the less stringent reporting standards on OTC stocks.

Getting to know you
Fortunately, The Motley Fool's Global Gains team is here to help. Advisors Tim Hanson and Nathan Parmelee will take off for India shortly after waking up from their Thanksgiving turkey naps. While there, they'll meet with several management teams, as well as representatives from the Ministry of Finance and the head of the Bombay Stock Exchange.

If you're interested in following Tim and Nathan on their journey and hearing what they take away from their meetings, click here to receive their free dispatches from the road. Their experiences and insights can help you build your knowledge and confidence about investing in India, and we can give this poor middle child the attention it deserves.

Astute readers will notice that I haven't even paid lip service to Russia, BRIC's other middle child. Poor little guy.

Nate Weisshaar is the oldest of five children, and he likes to lord it over his siblings. He doesn't, however, own any of the stocks mentioned above. CNOOC is a Motley Fool Global Gains recommendation, and Petrobras is a Motley Fool Income Investor pick. The Fool's disclosure policy denies that it even has parents, claiming to have been here from the start.

Read/Post Comments (5) | Recommend This Article (17)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 24, 2009, at 10:46 PM, jomueller1 wrote:

    Sorry, you missed the boat. Though India is in the headline I do not see much information about India like economic statistical data and growth outlook. Mentioning two stocks and not even mention if there is an ETF is rather meager.

  • Report this Comment On November 25, 2009, at 11:04 AM, sofpan wrote:

    I watch an ETF named EPI "WISDOMTREE INDIA".

    I believe a good choise for someone who wants to play India for long term.

  • Report this Comment On November 25, 2009, at 11:06 AM, sofpan wrote:


    An ETF for India long play.

  • Report this Comment On November 25, 2009, at 1:22 PM, beewiz wrote:

    Shortly after my first trip to India, I bought TTM. The goods hauling trucks were the king of the road. That was some 8 or so years ago. Since then I have been in and out of Tata numerous times. The recent Nano news from a couple of years ago spiked my interest anew and I jumped back in. I suspected from what I saw that India was going to kick some butt. My Indian friends told me 5 years ago that they were glad of my confidence in their country, but that they were pretty sure that China was going to kick their butts exponentially. Whoda' thunk?? The beauty of travel is the remover of the blinders huh?

  • Report this Comment On November 26, 2009, at 8:28 AM, awidge100 wrote:

    There's a new ETF that tracks the NIFTY index (50 stocks, on the NSE). The ticker is INDY and has started trading from this week.


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