Global investors were greeted with a massive rally in India's stock market to start the week after the Congress Party-led alliance scored a victory in the emerging market country's general election.
Investors are betting in a big way that the ruling party's win can provide a boost to India's economy, and in their haste to snap up shares they triggered market circuit-breakers Monday as stock benchmarks surged to double-digit percentage gains.
"I think the market still has the potential to go up by another 10% to 15%," said Deven Choksey, managing director at K.R. Choksey Shares & Securities in Mumbai. See earlier coverage.
For investors who don't have the time or means to purchase individual Indian stocks, exchange-traded funds and notes can provide a broad-based, indexed approach for catching a prolonged rally.
Choices include Barclays iPath MSCI Index Index ETN INP, PowerShares India Portfolio PIN and WisdomTree India Earnings Fund EPI. Also, WisdomTree Dreyfus Indian Rupee Fund ICN follows the local currency, while First Trust ISE ChIndia Index Fund FNI blends Indian and Chinese stocks in a single wrapper.
The Indian-stock ETFs and ETNs enjoyed gains of more than 20% on Monday as the U.S.-listed funds joined in the buying frenzy. Exchange-traded portfolios following overseas market trade in the U.S. even while the underlying markets are closed due to time-zone differences. As such, some traders use them as a rough gauge of fair value after international markets cease trading.
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