Diwali celebrations mask India investment fears
Investors in the region face further volatility ahead of the 2014 election, experts warn
Fireworks marking the Hindu celebration of Diwali – the festival of lights –have become a highlight of the autumn months in parts of Britain in recent years. Festivities began last weekend when more than 35,000 people gathered in Leicester for the switching on of the city's Diwali lights.
In India the festival is a national holiday and starts with Dhanteras, the day on which most Indian business communities begin their financial year.
But for those who invest in India, there's been little to celebrate in recent times. "India suffered during the emerging markets rout in the summer as concern about slowing growth and its twin deficits resurfaced," pointed out Avinash Vazirani, manager of the Jupiter India fund.
"However, a more sanguine view of its prospects has begun to take hold since Raghuram Rajan's arrival as the new governor of the central bank. He has shown himself to be a determined reformer, willing to press forward with unpopular decisions."
Chief among these was Mr Rajan's decision to raise interest rates. The move took everyone by surprise and dismayed business groups. But he also lowered the cost of funds for banks, and eased other restrictions imposed in July designed to support the currency.
"Economists and the government seem to be becoming more positive about India's ability to manage its current account deficit. Meanwhile, the good monsoon season, considered to be the best since 1994, should help reduce food inflation and have an impact on GDP growth in the agricultural sector," said Mr Vazirani, who said there are good opportunities to acquire strong companies at reasonable valuations.
Angus Tulloch of First State took a recent trip to India. "That reaffirmed that quality companies can flourish in spite of a poor political and economic backdrop," he said.
"In addition to visionary owners, who appreciate the benefits of looking after minority shareholders well, Indian family businesses seem to have an unusually positive approach to real partnerships."
The trip encouraged him to add stakes in trusted family businesses with strong franchises such Godrej Consumer and Titan Industries. "The economic and political weaknesses of India are a concern but are manageable over the longer term," he said.
But Rajendra Nair, fund manager of JPMorgan India, warned India is vulnerable to external factors. "Its current account deficit has led to significant currency volatility, especially in the current risk-off environment where we are also seeing capital outflows," he said.
However, he said valuations of the Indian stock market are at near-historical lows. "We believe that investment into the Indian market offers upside both in terms of currency and market appreciation," he said.
Juliet Schooling Latter, research director at Chelsea Financial Services, said: "I still think Indian equities are a good long-term investment but they are likely to remain volatile, particularly in the shorter term.
"The country has a number of structural issues and a deficit that needs need to be addressed, but with next year's election looming, minds are focused more on getting re-elected than sorting things out.
"It's really an area for higher-risk investors though who can afford to 'invest and forget' for a while – either that or do monthly investments so they can stomach the volatility."
Simon Read: Frozen in time - the expat British pensioners who deserve a better deal
Energy switching app Voltz allows users to switch with just a few taps
Money Insider: Smart alternatives to the pensioner bond
Number of serially under-performing investment funds has increased by a fifth, survey reveals
Bank-beating exchange rates on your international payments
- 1 Benedict Cumberbatch says Hollywood is better for black British actors
- 2 Man who held up 'hire me' sign at Waterloo station returns a year later with 'I'm hiring' sign
- 3 UK weather: Snow to fall in the coming week with sub-zero temperatures to last until early February
- 4 Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
- 5 Warriors in ancient Iraq suffered Post-Traumatic Stress Disorder more than 3,000 years ago, say researchers
Nigel Farage: NHS might have to be replaced by private health insurance
'We would evict Queen from Buckingham Palace and allocate her council house,' say Greens
French court convicts three over homophobic tweets, in case hailed as a 'significant victory' by LGBT rights campaigners
George Galloway condemns 'racist, Islamophobic, hypocritical rag' Charlie Hebdo at freedom of speech rally
British Muslim school children suffering a backlash of abuse following Paris attacks
Islamic history is full of free thinkers - but recent attempts to suppress critical thought are verging on the absurd
iJobs Money & Business
£30000 - £32000 per annum + benefits : Ashdown Group: A highly successful, int...
£18000 - £20000 per annum: Recruitment Genius: This rapidly expanding business...
Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...
£16000 - £25000 per annum: Recruitment Genius: This is an exciting opportunity...
Day In a Page
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village