How to earn on investments in India
Stocks, currencies, real estate and other opportunities and risks of private investor who made a bet on the growth of the Indian economy.
In place of plywood and cardboard boxes just in Mumbai now grow skyscrapers. "Here a solid business, India became the center of the world" is one of the heroes of the film slumdog millionaire (2009) not far from the truth. India is the world's second largest growing economy after China. Over the last decade, the average growth rate of GDP was 7.7%.
"Hundreds of millions of people Here eat just once a day. A strong desire to escape from poverty is a powerful stimulus to the growth of domestic consumption, domestic market and related sectors, is convinced the Director MTS India Vsevolod Rozanov. In his view, this country would be difficult to lose money over the next three to five years.
But, as in any of the BRIC countries, India has its risks. For example, high inflation (9.3% in 2011 year) to combat the Reserve Bank of India from March 2010 year 13 times increased the discount rate. Or the possibility of slowing economy to 5.5% per year, as Credit Suisse predicts. But high profits were incompatible with low risks. As a private investor to bet on the growth of the Indian economy?
Equity funds and shares
Buy Indian equities could be on two major stock exchanges of the country. Both are located in Mumbai. It is the oldest in Asia, the Bombay Stock Exchange (BSE), a leading history from the mid-19th century, and the national stock exchange (NSE), which began work in 1994 year. The index of the Bombay Stock Exchange-BSE India Sensex 30, NSE Nifty index serves as a key indicator of 50.
The easiest way to invest in India-buy through a broker Paper index fund. Management company iShares offers Fund S&P India Nifty 50 Index available on the NASDAQ and the BSE Sensex India, traded in Hong Kong. For 2011 the year of fund units have lost 33-37% of the value of the capital outflow from the country. 2011 year of the BRIC markets in General ended with similar results, losing about 20%.
Investment Bank Morgan Stanley to review India, indicates the signs of the beginning of a new bullish trend, Credit Suisse has enabled India to the list of the four most cheap markets and Nomura Equity Research expects its growth to 10-15% in the year 2012. Of course, all of these forecasts, as in any emerging market, depends on foreign investors and is at issue in the case of the escalation of the European financial crisis.
Deputy Head of investment banking "Renaissance Capital" Hasnen Varavalla recommends to invest in the company's consumer and infrastructure industries. Among the companies infrastructure industry analysts at Nomura Equity Research are advised to pay attention to shares of Voltas.
Founded in 1954, the company develops and produces technical solutions for construction, textile and mining industries. In addition, Voltas is a leading manufacturer in India and the operator of air conditioning systems. Credit Suisse assessment growth potential of its shares of 129%.
Oil and gas companies benefit from the weakening of the rupiah. Goldman Sachs recommends that paper the largest Indian holding company Reliance Industries, which is part of the Fortune Global 500. The company's core business is focused in the field of mining and oil refining. Cooperation with BP and impressive cash resources may contribute to the growth of shares on 21%.
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Indian rupee partially convertible-foreigners cannot export (and import). But the non-resident can freely open a checking or savings account at a local bank. This account is called Non-Resident Ordinary Account (NRO). For example, HSBC India offers to invest no less than 5 million rupees ($100 000000) for three years under 8% per annum (rate barely overlaps the inflation).
The investor may lose a further weakening of the rupee against the dollar and, in any case, bears the costs of conversion. Officially, the Indian rupee exchange rate floating but the rupee against the dollar is actually managed in the hallway. The Reserve Bank of India has been implementing intervention to smooth exchange rate fluctuations, which in February 2012 year amounted to 49.5 rupees per dollar.
All in Russia. The worsening external risks causing capital outflow and leads to a weakening of the currency, the rupiah has lost about 16 percent against the dollar in the past year, the United States, showing the worst result among the Asian currencies. "The pressure on the rupee will continue until a solution is found to the problem of sovereign debt in Europe," said Indian Finance Minister Pranab Mukherjee. Citi analysts predict course 49 rupees to the dollar for the year 2012 and 48.5-2013 year. Vsevolod Rozanov said that India looked forward to returning to 44-46 rupee denominations per dollar.
Investment in Indian real estate, given that quality housing in the country a bit, should bring good income. As with any emerging market, India stands to look for partners and rely on luck, says the Director of Jones Lang LaSalle in India Anuzh Puri. Time for investment seem to be successful: during the crisis, prices of homes and apartments fell to 70%.
For the 2010-2011 year 10th and market played drop by half. Housing economy in Mumbai worth $500-700 per sq. m. Elite-to $13 000000 per sq. m. But now the price increase has stopped. According to analysts, in the following years the cost per square meter will not grow as fast-approximately 5% per year.
You can purchase homes for rent. Villa 200 m2 in size. m with four bedrooms, furniture and garden in the States of Goa or Kerala will cost approximately $150 000000 ($750 per sq. m). A three-star hotel with 10 rooms is about $900 000000 ($1500 per sq. m). True, revenue from rent houses small: only 4-6%, says Anuzh Puri.
You may want to consider housing in other cities. For example, Villa in Bangalore cost $330 000000 can be rent for $1000 per month. Annual return net of all taxes and charges even less than in Goa and Kerala-about 3.5%, calculated at Knight Frank. In addition, the owner must decide all issues with the lease. "Without daily supervision likely abuse by local personnel," says the Director of the Department of elite residential real estate company Knight Frank Elena Jurgeneva.
You can try your luck in the segment of commercial real estate and buy commercial or Office Center, they do little, even in large cities. Director of the consulting company Indriksons.ru Igor Indriksons advises to acquire shopping center in Mumbai at least 10 000 sq.m. m: "Small stores often burn through. This shopping-mall will cost $10 million.
Return on commercial property is significantly higher than from residential: 10-12% per annum. But here, the alien must be prepared for difficulties. Tourist visa holder has no right to buy property in India. For this purpose it is necessary to either obtain business visa and live in the country for at least 183 days, either start a company and buy Office Center through a legal entity.