Parchayi.com – Personal Finance Simplified

I recently was in Bombay for a month. After 4 years Bombay is a totally different place. There is even more construction everywhere – the airport is being expanded, new flyovers, new metro under construction, new skyscrapers advertising everywhere, fancy highways and more giant malls than one can possibly imagine. 4 years ago there already seemed to be enough malls and no more space left for anything else but somehow the space existed. All good but this has caused Bombay to be significantly more polluted and congested. But pollution and congestion aside, you can see economic growth happening right in front of you. 4 years ago the airport was as bad a mess as a local train in Bombay and now it was a breeze getting through immigration.

It’s no wonder my investments in India were amongst the better performing in the last few years. I could see no signs of recession any more. There is still extreme poverty and it is even more visible when right next to a fancy glass mall and I don’t expect that to go away anytime soon. But more people can afford more things and I saw more fat people that I have ever seen in India – a definite sign of prosperity.

In fact I found a lot of things in India very expensive when compared to the US but that didn’t seem to stop people from buying things. No wonder so many multinationals want to be in the Indian market. Just major metros are giant markets and there is the whole rural market to grow into.

For those of you looking to Invest in India now you have at least four easy ways – IFN, IIF, INP and EPI.

Here is a list of ETFs that invest Primarily in India

Here is a list of Indian ADRs. More info and links will be added in the next few days.

Tata Motors unveiled the Nano today – its highly anticipated 1 lakh Rs. ($2500 approx) car at the New Delhi Auto Show. The street price after taxes and destination fees will be about 1.2 lakh for the base model. Here are the specs: 30 HP, 624cc engine, Seats 5 (it seems). It has a 4 speed manual transmission and is completely barebones but at over 50mpg (20kmpl), it is fantastic with India’s high fuel prices. Tata also claims that the car meets or beats safety and environmental standards and is less polluting than two wheelers! If the Nano is a success, Suzuki will probably see a significant dent in its >50% market share in India. Their closest competitor the Suzuki 800 is twice the price of the Nano.

More info at Times of India

At the other end of the market, Tata is now the frontrunner for buying Jaguar and Land Rover from Ford. So Tata Motors has got you covered for everything from commercial trucks to the entire gamut of passenger cars and trucks. The stock fell 2.75% in the Indian market today amongst a broader 287 point decline in the market.

The Bombay stock exchange breifly crossed 20,000 twice before closing below 20,000. Is 20,000 here to stay or are we headed in for a wild ride and headed back to 18,000? Noone can tell. For now, I have unloaded my India funds and taken some profits. I will get back in at dips. However they maybe a while coming if the current pace continues. It took only a few weeks for the massive gains.

Along with India, China has also posted spectacular gains. Thanks in part to India (INP) and China(FXI), my mimf2007 contest portfolio is up more than 50% for the year.

Recently I ran across an interesting new ETF – FNI – First Trust Chindia – exposure to both India and China in the same fund – that’s nice. The only problem with this fund is that it invests in ADRs, not directly in the market. The problem with that is that there are not that many Indian ADRs to select from so the fund basically invests in all of them. I don’t know what the case for Chinese ADRs is, however. FNI has done well since it’s inception this year (obviously) but ADR premiums and discounts swing wildly and make for too much volatility. Inspite of that I might consider a position in FNI with some of the proceeds from my IFN and INP sale to gain some China exposure.

The BSE Sensex was up nearly 600 points yesterday, it’s 10th straight day of gains and 10th straight record close! The last few months have seen the market go up a couple of thousand points and it shows no signs of slowing down. However the index has also seen thousand point drops when it has risen so fast in the last couple of years. Eventually though it has always recovered and reached new highs very quickly.

I sold all my IFN in the India Funds rights offer and am waiting for dips below 50$ to buy some back. However this time around I might consider INP or FNI instead. I do own some INP already and it has given me spectacular returns. This has been an expensive year for me with travel, immigration and other expenditures, however my exposure to emerging markets is keeping me on track to meet my net worth goals for the year.

IFN will payout $56.4285 per share of IFN and from my account at scottrade it seems that they accepted all my shares!! So the rights offer was a great deal and I hope to buy some IFN back in time for the dividend after they deposit the money in my account. As of Friday (the day of the offer), the discount on IFN was nearly 12%.

I hope you made some money reading this blog!

The India Fund has made available NAV values for each day of this week. Yesterdays NAV was 53.12, making the price a 15% discount and the repurchase offer even more attractive! I’m going to wait until Friday before I make the decision but it looks like the repurchase offer is likely to be a good bet.

The India Fund announced the commencement of it’s semi-annual repurchase offer on Friday. The dealine to respond to the offer is 5PM Eastern on September 14. The shares will be purchased at 2% less than NAV on September 21.

On Friday, The India Fund traded at a discount of 7.3% to NAV and this is significantly less than the discount of 13% in June. However, if this discount continues at the same level the offer is still valuable as you can make 5% profits for doing nothing.

Be warned that Scottrade will charge a 25$ fee for this and you should check with your broker what they will charge. Also check the premium/discount to the NAV on Sep. 7 (the last one available prior to the deadline) before making your decision. Click here for a chart of the premium/discount history for IFN.

Tata Motors Ltd. (TTM) is going global. Just look at the recent headlines about the stock:

India’s Tata, Mahindra eyeing Jaguar, Rover: report – This is not necessarily something I personally support or like but as a part of global expansion, I would deem it ok.

Report: Tata Motors to Invest in Thailand

Tata Motors plant in S.Africa likely

Tata ventures into Saudi Arabia car market

Foreign shores beckon Tata Motor Finance

With this kind of explosive growth, the stock seems to be a great buy. Even with the 5% increase in the stock price today, the ADR trades at a modest discount (~0.7%).