patanx
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Oct 13, 2006, 5:17 PM
Post #1 of 1
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Investors Return: India is back on track
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Stocks are climbing as investors pour funds back into the local market, betting companies such as Reliance Communications Ltd. and Grasim Industries Ltd. will benefit from accelerating economic growth. Stock sales by offshore investors in May triggered a monthlong slide in the market that wiped $259 billion off the value of the country's listed companies.
Indian stocks dropped after investors sold shares on concern higher interest rates would stifle economic growth and oil prices at records would add to corporate energy costs and crimp consumer spending.
Those concerns were allayed after the U.S. Federal Reserve ended a two-year streak of interest-rate increases and oil prices dropped 20% from record highs set in July.
Overseas investors are looking to benefit from India's relatively rapid growth. Last year they ploughed a record $10.7 billion into the local market and this year's net purchases total $5.37 billion. Since June 14, they've bought local shares worth $2.77 billion, surpassing the amount they sold during the rout. Corporate earnings are expected to grow at between 15% and 20% so we can expect similar returns for the stock market.
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