Private Investor: An Eastern promise that remains intact

I knew that I was right to hold my nerve and hang on to my shares in the JP Morgan Indian Trust when the Indian market tanked a few months ago. I didn't, however, expect to be vindicated quite so quickly.

If you've been following the Indian economy and financial markets closely (aren't we all?), you'll recall that the Mumbai markets took a bit of tumble in June, with something like a third knocked off the value of stocks over the course of a couple of weeks. Now, however, the market has fully recovered and who knows where it will end?

Part of the answer, just possibly, lies in looking at the past. Well, actually, none of it, if the truth be told, because we all know, don't we, that past performance is no guide to the future. I suppose what I mean to say is that it's just fascinating to have a glance at how the Indian market has performed over the long term.

I've had a bit of a trawl on the internet and found that the main Indian stock market index is called the Sensex, which has a base of 100 as of 1979. If only I'd been old enough, rich enough and far-sighted enough to have put money into India then. The Sensex crossed the 1,000 mark on 25 July 1990; the 2,000 mark on 15 January 1992; the 3,000 mark on 29 February 1992; the 4,000 mark on 30 March 1992; the 5,000 mark on 11 October 1999; the 6,000 mark on 2 January 2004; the 7,000 mark on 21 June 2005; the 8,000 mark on 8 September 2005; the 9,000 mark on 9 December 2005; and the historic 10,000 mark on 7 February 2006.

It created another landmark when it touched 11,000 on 27 March 2006. Last week the Sensex closed at a high of 12,903 on 28 October. I'm indebted to the contributors to Wikipedia for this data, and they point out that: "To reach from the 11,000 mark to the 12,000 mark only took 19 working days, the shortest time interval for a 1,000-point climb in Sensex history, surpassing the just-set record of 29 days that it took to reach 11,000 from 10,000."

So that's where we're coming from. Me, I started putting a few pounds a month into the JP Morgan Indian Investment Trust about 10 years ago, when the shares were priced at 50p or so; now they're approaching the £3 mark, mirroring the general climb in the Indian market. And they say the Indian growth story is only just beginning...

The JP Morgan Trust's main holdings are: Infosys Technologies, Mahindra & Mahindra, Bharat Heavy Electricals, Satyam Computer Services, Larsen & Toubro, ITC, Associated Cement, National Thermal Power, Bharti Airtel and Wipro. You don't have to be a great expert on these firms to see that the Trust's mix of industrial and hi-tech companies echoes that of the Indian economy as a whole, which is one of the most attractive features.

For this is a developing market that is not only penetrating the old industrial sectors of the West (Tata Steel's purchase of Corus being symbolic of that) but is also making its presence felt in the service sectors of the future - everything from call centres to software writing. Plus, as I have written many times before, there are India's traditional strengths of democracy, the use of the English language and an increasing openness to globalisation.

There are weaknesses too: economic nationalism is far from dead, there are obvious geopolitical tensions, corruption and rampant bureaucracy but I've always thought India would outflank China in the long term. All I need is for the Sensex to keep on rolling.

Maybe I should have put my JP Morgan Indian Investment Trust shares into an ISA wrapper, given the potential tax bill I'll one day be faced with (assuming all goes well, ahem). However, the fees always seemed too high, and I was interested to see that Ed Balls, economic secretary to the Treasury and "mini-me" to the chancellor of the exchequer, has been toying with the whole regime this week. He was wise to abolish the distinction between the maxi ISA and the mini ISA, and bring PEPs and the Child Trust Fund into the fold, a rare example of the Treasury simplifying the tax rules.

But it was a pity he's not taken the opportunity to uprate the limit of £7,000 per year, which looks set to be frozen and thus suffer a sort of "fiscal drag" as it declines in real terms. I mean, does the Government want to encourage us to save or not? Keeping up with inflation wouldn't have hurt much. Thanks for nothing, Ed.

s.ogrady@independent.co.uk