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Indian Stock Market at Record High: ETFs to Buy

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Indian benchmark equity index, Nifty crossed the 10,000 mark for the first time, owing to overall optimism in the markets.


The NSE Nifty breached the 10,000 mark during intra-day trading on July 25, 2017 but closed relatively flat at 9,964.55 as profit booking caused the gauge to fall. The BSE Sensex also hit a new high of 32374.30 but closed lower. Per National Securities Depository Limited, Indian equities have seen foreign investment to the tune of Rs 560 billion so far this year. Six out of the 13 indexes compiled by National Stock Exchange Limited (NSE) advanced.


Analysts believe multiple reasons such as positive earnings results, a good monsoon and expectations of a rate cut by the Reserve Bank of India (RBI)  behind this optimism in the markets. India’s GDP grew 6.1% in the first quarter of 2017 compared with 7% in the previous period and below market estimates of 7.1%. This presents a strong case for possible rate cuts (read: India Inflation at Record Low: ETFs in Focus).


India introduced a major tax reform earlier this month with the introduction of a single unified tax, Goods and Services Tax (GST). With the demonetization effect almost over, the market is bullish on the role GST will play in driving economic growth (read: India to Unify Tax: Near-Term Pain/Long-Term Gain for ETFs).


Per Livemint, Nifty is trading at a multiple of 12 times the next 12 months’ expected earnings, while the Sensex is trading at a multiple of 18.6 times. This is higher than the 12.7 multiple of MSCI Emerging Markets Index.


Let us now discuss a few ETFs focused on providing exposure to the emerging market nation (see all Asia-Pacific (Emerging) ETFs here).


iShares MSCI India ETF (INDA - Free Report)


This fund provides exposure to large and mid-sized Indian equities.


It has AUM of $5.32 billion and charges a fee of 71 basis points a year. Financials, Computer-Software and Consumer Discretionary are the top three sectors of the fund, with 22.81%, 13.66% and 12.84% allocation, respectively (as of July 24, 2017). Housing Development Finance Co, Reliance Industries Ltd and Infosys Ltd are the top three holdings of the fund, with 8.73%, 7.44% and 6.46% allocation, respectively (as of July 24, 2017). The fund has returned 16.44% in the last one year and 27.08% year to date (as of July 25, 2017). INDA currently has a Zacks ETF Rank 2 (Buy) with a Medium risk outlook (read: Why India ETFs are Soaring in 2017).


WisdomTree India Earnings Fund (EPI - Free Report)


This fund provides exposure to Indian equities in multiple capitalization segments.


It has AUM of $1.76 billion and charges a fee of 84 basis points a year. Financials, Energy and Information Technology are the top three sectors of the fund, with 25.37%, 21.16% and 16.33% allocation, respectively (as of July 25, 2017). Reliance Industries Ltd, Infosys Ltd and Housing Development Finance Co are the top three holdings of the fund, with 12.06%, 6.60% and 6.11% allocation, respectively (as of July 25, 2017). The fund has returned 23.25% in the last one year and 29.90% year to date (as of July 25, 2017). EPI currently has a Zacks ETF Rank 2 with a Medium risk outlook (read: India ETFs: More Run Ahead?).


iShares India 50 ETF (INDY - Free Report)


This fund provides exposure to large-cap Indian equities.


It has AUM of $1.14 billion and charges a fee of 94 basis points a year. Banks, Computer-Software and Refineries/Marketing are the top three sectors of the fund, with 26.30%, 11.20% and 9.12% allocation, respectively (as of July 24, 2017). Reliance Industries Ltd, Housing Development Finance Co and ITC Ltd are the top three holdings of the fund, with 7.18%, 6.95% and 6.65% allocation, respectively (as of July 24, 2017). The fund has returned 19.76% in the last one year and 29.48% year to date (as of July 25, 2017). INDY currently has a Zacks ETF Rank 2 with a Medium risk outlook.


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