Mark Dampier: Savvy investors keep eyes peeled on India

The Analyst

I last wrote about the Jupiter India Fund in November, but an update might be worthwhile because the Indian stock market has performed particularly poorly over the past few months. Since the start of the year the fund is down around 15 per cent, although some of this is accounted for by the fall in the rupee. Global fund managers are partly to blame, cutting their weightings to emerging markets to their lowest levels since March 2009, according to a recent survey. However, India has excellent long-term potential, and in the past any sustained falls in the market have provided an outstanding buying opportunity.

The problems for India began in November with the telecoms scandal, which produced allegations of bribery and abuse of political power, with the telecoms minister being arrested. This has positive ramifications for investors in that it is a sign the Indian government won't tolerate corruption. This was only the start of the challenges.

India imports much of its oil and food has been susceptible to recent price rises. Onions, too – a staple of Indian cooking – rose four-fold because of unusually heavy rains, and this alone has been enough to cause serious unrest in the past. Avinash Vazirani, manager of Jupiter India Fund, feels the fears of inflation and interest rate hikes have been exaggerated. He points out inflation has fallen from a high of 12 per cent in the middle of last year to about 8 per cent now. Food price inflation has been exacerbated by infrastructure deficiencies. Roads and railways are improving, but some 18 million tonnes of grain was left to rot because it couldn't be transported in time.

Gradually, India will address these issues. Mr Vazirani says that food inflation is not necessarily bad for the country as a whole as the majority of Indians live and work in the rural community and stand to benefit from price rises. Rural wages have improved markedly since last year, far in excess of inflation, and this is leading to a much higher consumption of goods and services. Interest rates have risen seven times since October 2009 to the present 7.2 per cent. Mr Vazirani believes they will rise by only another 0.5 per cent – less than most are anticipating. If he is right the market could rally once it is perceived interest rates have peaked, and the forthcoming budget may be a catalyst to show that India's financial problems are not as bad as investors believe. Mr Vazirani also highlights the considerable impact biometric cards will have as they are rolled out, and he expects 100,000 a day to be being issued by June. This could improve government finances, enabling taxation and benefits to be targeted more precisely.

He hasn't been this positive on the prospects of individual companies for a long time. In terms of valuations, the market is on a price-to-earnings ratio of about 14 times March 2012 earnings – a more expensive rating than other emerging markets but still reasonable, given the make-up of India's economy and a bias towards the IT and consumer sectors. Many Indian companies are good value relative to their Western counterparts, despite serving a young, vibrant population that is becoming wealthier. So keep your nerve with the Indian market. Further falls cannot be ruled out but the correction is providing a good opportunity to top up.

Mark Dampier is head of research at Hargreaves Lansdown, the asset manager, financial adviser and stockbroker. For more details about the funds included in this column, visit

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at

Suggested Topics
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Office Manager / Financial Services

    £30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...

    Jemma Gent: Year End Accountant

    £250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...

    Jemma Gent: Management Accountant

    £230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...

    Beverley James: Accounts Payable

    £22,000 - £23,000: Beverley James: Are you looking for the opportunity to work...

    Day In a Page

    HIV pill: Scientists hail discovery of 'game-changer' that cuts the risk of infection among gay men by 86%

    Scientists hail daily pill that protects against HIV infection

    Breakthrough in battle against global scourge – but will the NHS pay for it?
    How we must adjust our lifestyles to nature: Welcome to the 'Anthropocene', the human epoch

    Time to play God

    Welcome to the 'Anthropocene', the human epoch where we may need to redefine nature itself
    MacGyver returns, but with a difference: Handyman hero of classic 1980s TV series to be recast as a woman

    MacGyver returns, but with a difference

    Handyman hero of classic 1980s TV series to be recast as a woman
    Tunnel renaissance: Why cities are hiding roads down in the ground

    Tunnel renaissance

    Why cities are hiding roads underground
    'Backstreet Boys - Show 'Em What You're Made Of': An affectionate look at five middle-aged men

    Boys to men

    The Backstreet Boys might be middle-aged, married and have dodgy knees, but a heartfelt documentary reveals they’re not going gently into pop’s good night
    Crufts 2015: Should foreign dogs be allowed to compete?

    Crufts 2015

    Should foreign dogs be allowed to compete?
    10 best projectors

    How to make your home cinema more cinematic: 10 best projectors

    Want to recreate the big-screen experience in your sitting room? IndyBest sizes up gadgets to form your film-watching
    Manchester City 1 Barcelona 2 player ratings: Luis Suarez? Lionel Messi? Joe Hart? Who was the star man?

    Manchester City vs Barcelona player ratings

    Luis Suarez? Lionel Messi? Joe Hart? Who was the star man at the Etihad?
    Arsenal vs Monaco: Monaco - the making of Gunners' manager Arsene Wenger

    Monaco: the making of Wenger

    Jack Pitt-Brooke speaks to former players and learns the Frenchman’s man-management has always been one of his best skills
    Cricket World Cup 2015: Chris Gayle - the West Indies' enigma lives up to his reputation

    Chris Gayle: The West Indies' enigma

    Some said the game's eternal rebel was washed up. As ever, he proved he writes the scripts by producing a blistering World Cup innings
    In Ukraine a dark world of hybrid warfare and murky loyalties prevails

    In Ukraine a dark world of hybrid warfare

    This war in the shadows has been going on since the fall of Mr Yanukovych
    'Birdman' and 'Bullets Over Broadway': Homage or plagiarism?

    Homage or plagiarism?

    'Birdman' shares much DNA with Woody Allen's 'Bullets Over Broadway'
    Broadchurch ends as damp squib not even David Tennant can revive

    A damp squib not even David Tennant can revive

    Broadchurch, Series 2 finale, review
    A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower: inside the mansion of Germany's 'Bishop of Bling'

    Inside the mansion of Germany's 'Bishop of Bling'

    A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower