While stock markets movements cannot be predicted accurately, I think the fundamental boom in the Indian citizens lifestyle will drive up stock markets to levels not seen before. The Indian economy is waking up from a deep snooze (circa 1997), put to sleep by a stagnating economy, high interest rates, poor job growth,incompetent fiscal management and religious/caste strife. Compare the economy in 1997 with today's growing econony at 7%+, lowest interest rates in history, abundant jobs for the middle-class, record infrastructure investment and an increasing postive sentiment towards a better future.

While systemic problems of corruption, caste/religion politics, Indo/Pak tensions and the mafia-politicians nexus still remain, I think the harbingers of hate will tone the rhetoric down, and probably benefit in far greater magnitudes from a booming stock-market than they would otherwise. On similar lines, Las-Vegas provides a case where the mafia benefitted more due to legitimate gambling than their mafia activities.

While the stock market bullet train is pulling away, the question of which stocks to invest is always the toughest one. I believe bets on companies with strong balance sheets, good liquidty and whose stocks are breaking out probably provide the the best risk/reward ratio. While a rising tide raises all boats, stocks with poor fundamentals or illquid float get hammered heavily by bears whenever the sentiment turns negative. IMHO reducing risk is the best reward.

NSE stocks to watch

In todays market I think Tata Tele Services (TTML.NS on yahoo) , Petronet LNG (PLNG.NS) and IDBI (IDBI.NS) are 3 solid stocks fitting the above pattern.

TTML has been experiencing volume breakouts over the past week after consolidating for over more than a year. TTML will benefit from the increasing land-line/mobile phone demand and oligopolyic nature of telecom/mobile service providers. Its been a mystery why the stock has been stuck in a range for such a long time.

PLNG in my opinion is the best Public sector (PSU) natural gas play in the stock market and is experiencing volume breakouts. I think the goverment has privatized this at a discount, another mystery which will remain unsolved.

IDBI has been under constant accumulation as seen from the charts. I believe Merril Lynch acquired 16 Million shares at 87. I think IDBI is fundamentally sound play with low interest boosting large industrial loans disbursement and a new legal framwork which provides for speedy proceedings against delinquient loans.


Tata Motors(TAMO.NS) and Tata Iron and Steel (TISC.NS) also provides a solid case for investment.

TAMO is a leader in automobiles and the charts have been looking very good. The auto manufacturers are increasing prices to factor in the rise in commodity prices like steel/plastic as done by Maruti.

TISC is a good commodity play as the worldwide demand for steel increases and steel makers hike prices. Again the charts are exhibiting bullish signals


ADR's to watch

TTM(Tata motors) is mirroring the NSE stock, so US investors can use this as a proxy for the Indian stock.

Oppenhiemers India fund (IFN) and Morgan stanleys's India fund (IIF) are 2 closed end funds available for for US investors who want exposure to India. I think due to its limited corpus, these funds havn't done as well as Indian Mutual funds or other international funds with bigger capitalizations. Its better to invest in an international funds like Fidelity International Discovery/Templeton Developing Makets and gain broad diversification , rather than go with a laggard funds like IFN or IIF.




Disclaimer : The stocks mentioned above are neither a buy nor a sell recommendation. Investors should do their own due-diligence before making any investments.