How to Invest in India

A growing area of interest is how to invest in India due to the South Asian country’s position as the second most highly populated country in the world and its democratic government. Adding to the attraction for investors has been the country’s notable recent growth rate, with India’s GDP ranking 3rd worldwide on a PPP basis in 2011 and racking up an impressive 10.4% growth in 2010 despite financial troubles elsewhere in the world.

Also, the fact that the English language is widely learned and spoken in India has made India an increasingly popular location for outsourcing jobs from the United States, Britain, Canada and Australia that can be performed remotely, including those in the information technology and customer service sectors.

Fortunately, those interested in learning how to invest in India have a growing number of choices available to them.
Perhaps one of the easiest methods is to purchase the Indian Rupee — the national currency of India — against another major currency such as the U.S. Dollar or Euro using the forex market.

The Rupee’s ISO 4217 currency code is INR, and it is generally traded as the counter currency in currency pairs. Due to the growing interest in how to invest in India, currency pairs such as USD/INR and EUR/INR are increasingly being offered by online forex brokers as trading instruments for those who open a forex trading account.

Since a currency can be looked at as the stock of a country, investing in India’s performance relative to that of the United States would be as simple as selling USD/INR.  Also, since the Bank of India’s benchmark repo rate is typically higher than the U.S. Federal Reserve’s benchmark interest rate, holding the Rupee versus the U.S. Dollar typically has the added benefit to investors of positive carry.

In addition, while purchasing Indian stocks directly via the Indian Stock Exchange is possible for institutional investors, it is currently difficult for foreign individuals that lack personal or family ties with India.

Nevertheless, some equity related investment choices exist, such as buying American Depository Receipts or ADRs that are issued by major Indian companies in the United States. Another way to invest in India is to buy into a mutual fund or Exchange Traded Fund (ETF) that holds a substantial portion of its portfolio in Indian stocks, bonds or other Indian investment assets.
By InvestorGuide Staff

Copyrighted 2016. Content published with author's permission.

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