Buy ETF on NIFTY Index

Trade Idea

Now is a good time to start investing in India. Fears of inflation and global recession have taken the Indian index down. It is now trading at 4,500 down from 6350 in early January (30% loss). Although the Indian economy is forecasted to slow down, it will still do reasonbly well: JPMorgan predicts a GDP growth of 7% in 08-09 compared to 8.7% in 07-08. The inflation risk comes from surging commodity and food prices. I don't believe that commodity prices surge will last forever: it has the caracteristics of a bubble (just remember that a few years back oil was trading at $17, has now reached $135 and an oil company executive recently predicted $250). And by raising rates, the Federal Reserve of India has shown that it is ready to fight inflation.




NIFTY now trades at 15.7 times the 12M forward earnings. That is a discount from the S&P500 who has to face a US recession. Incredible, isn't it?

Lyxor offers an easy product to bet on the rise of the Nifty index: the Lyxor India S&P CNX NIFTY, an ETF of Bloomberg id LNFT LN.

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