India's Newest Motley Fool

By February, I will have closed up shop at home in Washington, D.C., packed my bags, and headed east -- far east. My destination will be the explosive metropolis of Mumbai -- home to India's burgeoning financial markets, many of its largest conglomerates, and, of course, its increasingly well-known film industry. My purpose will be to evaluate India's long-term economic opportunities on an extended, first-hand basis.

Why India? Why now?
The rationale behind this exploratory mission of mine is quite simple. India's economy is growing at near double-digit rates. Its budding middle class is multiplying at incredible speeds. IPO markets are hot. Internet literacy is catching on quickly. Consumers are craving Western-style products.

Twenty years from now, the Indian equity markets are likely to be some of the largest and most dynamic on Earth. This in part explains my motivation behind wanting to be there, on the ground, learning as much as possible while this economy is busy establishing itself. But there's more to it than that.

The real opportunity
Like the United States, India suffers from no "official" shortage of stock research. But the country does appear to manufacture very little trusted, well-articulated, and independently sourced stock research -- a problem the USA once had.

Those unfamiliar with financial markets in India should know that even while Indian companies are emerging as global leaders, distrust is pervasive, particularly in the financial sector. Conflicts between buyers and sellers of stock information are as widespread as they were here in the states in the days before Regulation FD and the Internet.

The type of information that we like to provide (and use) at the Fool -- intelligent, independent, and ideologically accessible -- simply isn't available on many of the promising and not-so-promising Indian companies out there. This is essentially why I'm so drawn to the place.

The game plan
Assuming all goes well, I'll be moving to India for a few months -- perhaps longer. During that time, I'll be spending a good portion of my time writing for the Fool, hopefully providing the type of on-the-ground content that many of our readers find quite valuable.

I'll be paying particularly close attention to Indian companies that U.S.-based investors can invest in. For example, I'll be examining native firms available via American depositary receipts, such as Tata Motors (NYSE: TTM  ) . I'll be looking closely into whether the company's infamous $2,500 Nano is selling as well as the company claims it is. I can easily do channel checks, talk to customers and auto dealers, and get a feel for whether the car and the company have serious prospects for other emerging markets, outside of India. At the same time, it'll be very easy to examine Tata's booming competitors, including Ford (NYSE: F  ) and Honda (NYSE: HMC  ) , on the ground in India. In 2010, for example, Ford grew sales in the country by a whopping 184%.

I'll also be paying close attention to more familiar state-side names that are trying to build a long-term foothold in the Asian subcontinent. Wal-Mart (NYSE: WMT  ) , for example, has only two stores in India. But the company could easily open several hundred if restrictions on certain foreign retailers are lifted -- and it plans to. If and when that happens, I want Fools to be among the first state-side investors to know.

These are just a few of the missions I intend to tackle while I'm there. But in a country as complex as India, I suspect most of my efforts will be educational in value. Even after numerous visits to the nation, India still proves a most mysterious place.

A call forward
Now that you know why I am setting my sights on India, let me take this opportunity to reach out to you. I'd like to capitalize on the brilliant minds prowling around this website and invite any Fools with something intelligent to say about India to step forward. I humbly invite you to share your wisdom.

If you'd like to dish on India, please comment below or email me personally at NKapur@fool.com. Your insight and knowledge will help fuel one Fool's understanding of an emerging powerhouse.

Fool Nick Kapur could use your advice. He has no positions in any of the companies mentioned above, but he is heavily invested in India.

Ford Motor is a Motley Fool Stock Advisor recommendation. The Fool owns shares of Wal-Mart, which is a Motley Fool Inside Value selection and a Motley Fool Global Gains pick. 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.


Read/Post Comments (26) | Recommend This Article (55)

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 January 04, 2011, at 11:50 AM, TMFTypeoh wrote:

    Wow, Nick! Thats amazing!

    I hope you and the GG team have a good relationship, as I'm sure they will be pinging you for info all the time!

    Good luck with the move!

  • Report this Comment On January 04, 2011, at 11:59 AM, kavunaru wrote:

    I would be more interested in stocks that resonate with Indian economy. Those hidden small caps...

    I stared my researh on the holdings of ETFs SCIF and SCIN. Good Luck ..

  • Report this Comment On January 04, 2011, at 1:35 PM, TMFAleph1 wrote:

    A very exciting opportunity. There is no way this will not be tremendously enriching. Congratulations, Nick!

  • Report this Comment On January 04, 2011, at 1:38 PM, TMFHousel wrote:

    Incredible, Nick. Have a blast. Can't wait to see what you write.

  • Report this Comment On January 04, 2011, at 2:54 PM, thesullster wrote:

    Way to go!

  • Report this Comment On January 04, 2011, at 3:45 PM, Squirespeaks wrote:

    Really cool. At a time when newspapers are pulling foreign correspondants in order to cut budgets, this is a great indicator of how new outlets will continue to provide us with the news and information we need to make decisions.

  • Report this Comment On January 04, 2011, at 5:22 PM, diesel5 wrote:

    It seems to me that the opportunities are in building the infrastructure India needs. And not necessarily those that have to pay for and finance that build out (electric uitlieies and phone companies). I mean the builders of the infrastructure. Larsen and Toubro is a prime example. I'd like if you could dig into that one and report back. Also what do you think of INXX (Emerging Global Shares India Infrastructure ETF, Larsen is in that). I'm thinkin' I like both. In fact own both, but would be good to have a feet on the ground assessment from "my" Fool in India.

  • Report this Comment On January 04, 2011, at 5:38 PM, diesel5 wrote:

    Here is a profile for Larsen and Toubro FWIW and to wet you appetitie for this company- located in... none other than Mumbai it says at the end:

    "Larsen & Toubro Limited operates as a technology, engineering, construction, and manufacturing company. Its Engineering and Construction Projects division provides EPC solutions for the hydrocarbon, power, water, cement and allied machinery, and engineering services industries. The company’s Heavy Engineering division offers custom designed and engineered critical equipment and systems for the oil and gas, refinery, cracker, petrochemicals, fertilizer, chemicals, power, aerospace, and defense industries; and constructs commercial vessels and warships. Its Engineering, Construction, and Contracts division provides civil, mechanical, electrical, and instrumentation engineering services for industrial sectors and infrastructure projects. The company’s Electrical and Electronics division offers switchgears, electrical systems, energy meters, automation and medical equipment, and petroleum dispensing pumps. Its IT and Technology Services division provides application development, maintenance, support, and outsourcing services; and business process, consulting, infrastructure management, engineering, product life cycle management, enterprise and system integration, testing, SAP, and Oracle services. The company’s Railway Projects division provides construction services for railway projects; and design and engineering, project planning, and operation and maintenance services. Its Power division offers construction services for hydro, thermal, and nuclear power plants; and undertakes power development, plan automation, and power transmission and distribution projects. The company’s Machinery and Industrial Products division offers construction and mining equipment, material handling products, crushing equipment, hydraulic equipment, valves, rubber and plastic processing machinery, paper machinery, welding products, castings, windmill components, and cutting and engineered tools. Larsen & Toubro was founded in 1938 and is headquartered in Mumbai, India

  • Report this Comment On January 04, 2011, at 5:40 PM, Mikeconroy wrote:

    My quick impression of India (based on a couple week business trip in 2006) is that in certain areas it is mired in a strange combination on British Empire bureaucracy and emerging world inefficiencies. Dealing with banks and other financial institutions for such simple things as currency exchange can be a mind numbing experience of lines and pointless paperwork. Maybe it's changed, and maybe that was more a regional (Nainital, n. of Delhi) than a big city thing but I see this sort of thing as inhibiting commerce, to say the least.

  • Report this Comment On January 04, 2011, at 5:45 PM, nosaya wrote:

    Don't drink the water, and don't eat anything raw.

    Mikeconroy is very correct.

  • Report this Comment On January 04, 2011, at 6:01 PM, WhiteHatBobby wrote:

    Our new Governess is from a Punjab family (Randhawa). Should be interesting to see how many Indian firms set up shop here. Of course, Tata has a huge network of dealers here with Jaguar.

  • Report this Comment On January 04, 2011, at 9:15 PM, rpmcestmoi wrote:

    India is a great investment and will be subject to all the rules, many observed loosely, of all stocks. I like Tata and Ford, room for both in that building economy, particularly when the ruling class discovers that they will do better when they employ more people who then can afford to buy!! I have Ford, Tata, a fund and an ETF in the neighborhood. Tat is the current laggard but I don't expect that to be a longterm condition.

  • Report this Comment On January 04, 2011, at 10:14 PM, ungrimHK wrote:

    Perhaps a summary article on the available avenues to gain exposure to your featured Indian stocks (ADRs, GDRs and ETFs) would be useful... its my understanding that non-indian investors cannot access the domestic exchanges directly.

  • Report this Comment On January 05, 2011, at 3:35 AM, JEx9 wrote:

    hello Nick - good luck with your time in Mumbai!

    what a city!!

    looking forward to your reports v. much

    am pretty new to stock investing and really want to invest in India but know not where to even start ..

    all the very best

    Julian

  • Report this Comment On January 05, 2011, at 10:28 AM, griderX wrote:

    Above all have FUN!

    I had a chance to visit Bangalore and Mumbai during a business trip in 2006. From the second you get off the plane in Bangalore you feel the energy...the place is buzzing! Mumbai even more so....quite different from the States. As many Fool's mentioned infrastrcuture could be a huge boon to companies...wish some were publicly traded in the US. Can't wait to see what you write about.

  • Report this Comment On January 05, 2011, at 10:44 AM, David369 wrote:

    eat lots of curry and don't invest in a cattle ranch.

  • Report this Comment On January 05, 2011, at 12:55 PM, wyrdmage wrote:

    Which India companies are currently recommended by MF newsletters?

    I subscribe to SA & RB, but I'm not aware of any of their recommendations being for a company from India.

  • Report this Comment On January 05, 2011, at 3:34 PM, shirazk wrote:

    Great news. I believe this will be an exciting move for you and most likely profitable as well.

    I would like to follow your recommnedation in India closely. Please keep in touch.

  • Report this Comment On January 07, 2011, at 11:16 AM, deal2make wrote:

    I would like to hear your perspective on where the weaknesses and strengths are in the Indian market compared to China. In addition, I would also like to understand what impact the predominantly family-owned businesses in India do to their stock values and consequently the small stock owners. I would think it hurts innovation, transparency etc.

  • Report this Comment On January 08, 2011, at 2:46 AM, sambitbasu wrote:

    I packed my baggage and moved back to India last January after spending 17 years in US. I have been a Fool since 2000.

    I am no way a very savvy investor, more of a beginner. But this is what is my observation of the Indian Capital market (whatever it is worth).

    First, I agree with Nick is there is a dearth of transparency and good independent research on Indian companies.

    Second, Indian individual investors are less of a long-term investors and more of traders in nature. You will find the average volatility is higher. I don't what is the cause and what is the effect between the trading nature of the Indian investors and volatility.

    TTM is a good example. I had TTM in my portfolio since 2007. After coming to India, looking at the perception of Nano and number of cars on the road etc., I was contemplating selling the stock. But the final reason, why I sold the stock was that Ratan Tata (Tata group's chairman) got involved in some mobile spectrum related scam. Don't know whether he was really involved or not, but his name is surfacing every time the media is discussing this. And since Indian investors get swayed by perception (according to me), I sold the stock. Glad that I did. TTM has lost 10% since I sold the stock. Had it been in US, I wouldn't have sold the stock for this reason.

    Third, everyday you will get numerous SMS's like "Buy XYZ, current price 65.43, target 78.00, Stop loss at 71.00" without any backing information. And these are coming from the brokerage firm's analysts.

    There is one website http://www.capital4.com/ which is designed like the Fool site. You may want to check this out.

  • Report this Comment On January 08, 2011, at 4:45 AM, martinhill66 wrote:

    Nick, good luck in India. I'm sure you'll do a fine job there!

    S&P CNX Nifty highest dividend stocks:

    http://goo.gl/Erm2B

  • Report this Comment On January 08, 2011, at 8:47 AM, Beagle2Mars wrote:

    Hi Nick

    My India Fund increased 60% in 2009-10 and 38% so far this year. In some ways I wish I'd put more in but really I want to invest in individual companies. Interestingly the fund is run by a guy with experience of his country's market. IMHO you have to be there, on the ground, looking and listening and your move to India is one of the best TMF has had, getting a feel for what works and how it works.

    Companies involved in infrastructure are doing brilliantly and will continue to do so as the country opens up. It's the US (ie. full of entrepreneurs) without roads. I'll dish the difference between China and India by email. Both countries are powerhouses; it's just they're different people.

  • Report this Comment On January 08, 2011, at 7:27 PM, Monica109 wrote:

    I have been to India now five times--mostly to Hyderabad but also to Delhi, Vizag, Vellore, Chennai and Kakinada. Yes, I know. I was kind of all over the place. These are my perceptions:

    1. there is great potential for growth in India.

    2. Infrastructure is not where it should be.

    3. Education, especially those in the U.K and U.S., is highly valued and most students aspired to go abroad.

    4. Ford India has a really efficient plant in Chennai that produces the Figo. You should visit one of their plants while you are in India.

    I do believe that the differences between India and China are more than just different people. India is a democratic country while China is a communist country that allows free enterprise. In India, personal relationship is critical for a business to succeed. There is great potential for the small to medium businesses to operate both in India and China.

  • Report this Comment On January 14, 2011, at 10:11 AM, kstar66 wrote:

    Nick,

    What a great opportunity!! I envy you. Been to India 5 times over the last 4 years and loved every minute of it. Apparently, from what I hear businesses are booming and there's no sign of any kind of slow down. It would be interesting to get your take on the recession and its impact on the economy. It almost mystifies the mind. How do they manage do it with all that poverty!!

  • Report this Comment On March 03, 2011, at 2:54 PM, akm76 wrote:

    nick,

    please also check TCS-tata consultancy services and Bharti Airtel stocks

  • Report this Comment On May 03, 2011, at 7:59 PM, techlvr11 wrote:

    I am long on India (IFN) and so far I have seen both ups and downs.

    I like India because when I buy Indian securities, I can sleep well at night.

    A billion plus people, highly educated and well integrated youth, expertise and super explosive growth in Telecom, BioTech, Pharma, Medical Care, Chemicals, Auto, Space, Agriculture, Textile, Leather, Steel, Petroleum, Renewable Energy and Tourism make this the most exciting place to invest and grow your capital (yes, I deliberately left IT out of the mix to showcase why IFN is such a good investment).

    Above all, social equality and free society ensure no unpleasant surprises that we may start seeing in China in this decade.

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