Generations ago, only bold and forward-looking contrarians would put their money in foreign markets. However, with globalization uprooting the siloed nature of the old paradigm, international investments have never been more relevant. Typically, though, people tend to trade with the headlines, meaning China. But it’s now time to strongly consider Indian stocks to buy.
First and foremost, India’s benchmark Sensex index is off to an auspicious start to the new year. As well, over the trailing six-month period, it’s up over 33%. In contrast, our S&P 500 index is up a little over 21% during the same period. According to the Times of India, sentiment is positive due to the confirmation of Joe Biden as the next President of the United States.
Furthermore, the incoming administration will have full control of Congress, which should dramatically ease the gridlock compared to if Republicans controlled the Senate. Significantly, Biden’s election is a return to political normalcy, something that wasn’t the case with President Trump’s unorthodox administration. Further, Indian stocks have benefited from a robust influx of foreign money.
It’s no surprise that the smart money has elected India as a vehicle of profitability. According to data from the International Monetary Fund, the country’s GDP is expected to have grown 2.5% in 2020 and 9.52% at the end of this year. These are impressive numbers, indicating the resiliency of its economy and, by logical deduction, Indian stocks.
Just as importantly, India’s GDP growth rate over the last five years compares favorably to China, averaging 7.5% versus 6.4%. Geopolitically, it has never been more important to have a counterweight to the communist Chinese. Therefore, you can feel good about buying these Indian stocks.
- Tata Motors (NYSE:TTM)
- Infosys (NYSE:INFY)
- Icici Bank (NYSE:IBN)
- Eros STX Global (NYSE:ESGC)
- MakeMyTrip (NASDAQ:MMYT)
- Sify Technologies (NASDAQ:SIFY)
- Mahanagar Telephone Nigam (OTCMKTS:MTENY)
- Rediff.com (OTCMKTS:REDFY)
Further, data from the World Bank notes that in 2020, India’s unemployment rate was 5.4%, a modest uptick from the 5.36% joblessness rate in 2019. If this stat is accurate, it would again demonstrate the incredible resilience of the Indian economy. That’s one more reason why you can have confidence in these Indian stocks to buy.
Indian Stocks to Buy: Tata Motors (TTM)
With so many traditional automotive companies to choose from and a slew of electric vehicle firms hitting the roadways, Tata Motors sometimes gets lost in the crowd. That really seemed to be the case for TTM stock in 2020. From Tesla (NASDAQ:TSLA) going on its rocket ship ride to Chinese EV makers vying for American investment dollars, TTM was an afterthought.
Well, with Indian stocks capturing mainstream headlines, this is one of the top names to pay attention to. Already, TTM stock is up over 32% in the new year, and it has posted a blistering 141% return over the trailing half-year period. I believe more gains are on the way considering that the underlying company is tied to a growing market.
Back home, we’re worried about the eroding middle class. In India, it’s the opposite dynamic: the middle class is growing in number and households are increasing their purchasing power. That bodes well for Tata Motors’ combustion car sales. And as income continues to rise, this market is poised to become a significant player in the global EV arena.
While American media often frets about the performance of our students relative to their international counterparts, India is forging through with its growth and development phase. According to ComputerWeekly.com, “India’s tech sector currently makes up around 8% of its GDP.” Among the Indian stocks to benefit from the push to modernize the underlying economy is Infosys.
Specializing in digital services and consultations, Infosys works with many of the world’s largest enterprises. In December of last year, Infosys and automaker Daimler (OTCMKTS:DMLRY) announced a partnership to “drive hybrid cloud-powered innovation & IT infrastructure transformation in the automotive sector.” Further, the partnership involves a joint goal to “develop a persona-driven, cognitive, anytime, anywhere AI-powered workplace & service-desk.”
Given the accelerating infrastructure of India’s economy, it’s not inconceivable that the novel coronavirus pandemic could substantially lift the profile of INFY stock. With remote work being the new norm of the new normal, that work theoretically could be done anywhere.
India would be a great candidate for its overall lower cost of living relative to the U.S. Over time, INFY stock has much potential despite its presently overheated nature.
Icici Bank (IBN)
In the spirit of full disclosure, I haven’t been the most bullish on American banking firms, particularly the “big four.” With so many questions about the U.S. economy, particularly the startling loss of 140,000 jobs in December, I haven’t found much reason to be optimistic. However, it’s possible that Indian stocks levered to the financial sector could be an opportunity; hence, my inclusion of Icici Bank and IBN stock.
Before I get into it, the U.S. is of course the world economic leader. Therefore, a hit to us means the pain will be distributed in some way to everyone else. However, one of the biggest catalysts for IBN stock is that India is still in a growth phase, whereas our nation is maturing. That doesn’t mean domestic opportunities don’t exist, but the rewards will be potentially larger with Indian stocks.
Further, the Biden administration has a vested interest in bolstering relations with India. With India having a traditionally strong relationship with Japan, this offers an excellent counterweight against Chinese expansionism, a mutual adversary for all involved. And that could translate to more foreign investment in India, which bodes well for IBN stock.
Eros STX Global (ESGC)
When you think about India’s contribution to the globalized economy, you can’t help but think about its vast customer service network. And no, it’s not just a meme or a stereotype. More than 70% of the world’s call center outsourcing is through India. That’s in large part due to low labor costs and English fluency.
However, as Indian stocks grow and become more widely available to foreign buyers, the underlying nation will be known for other contributions, particularly in the arts. India-based films are massively popular, given the “Bollywood” craze. Buying shares of Eros STX Global, a burgeoning entertainment company, affords you exposure to this compelling market.
Now, I must say that ESGC stock is among the riskiest Indian stocks to buy. Over the trailing six-month period, shares are down 35%, which is not something you want to gloss over.
Still, with accelerating interest in foreign films and shows, I believe ESGC stock has longer-term potential. Furthermore, Eros is ramping up its streaming content, which has substantial implications for the new normal.
One of the more perplexing Indian stocks to buy, MakeMyTrip, presents risk and opportunity in equal measure for the speculator. As the name suggests, MakeMyTrip is an online travel company, providing services such as flight tickets and domestic and international holiday packages. Naturally, this places MMYT stock under a great deal of skepticism due to the Covid-19 pandemic.
According to Worldometers.info, India is behind only the U.S. in terms of total coronavirus cases, at 10.4 million. Not only that, so many other countries — especially hot destination spots like the U.K. and France — are among the worst-hit nations. That doesn’t leave many viable options for travelers, which could hurt MMYT stock.
On the other hand, the international vaccination rollout has begun in earnest, thanks to companies like Pfizer (NYSE:PFE) and Moderna (NASDAQ:MRNA). As well, India has taken leadership in the pandemic response, with the government setting up a vaccination drive that will begin on Jan. 16. If all goes according to plan — of course, this is a big assumption — a wager on MMYT stock could make sense.
Sify Technologies (SIFY)
On Jan. 11, Sify Technologies gave prospective buyers of Indian stocks something to think about, closing up over 79% against the prior session. If you’re familiar with this market, it may not come as a surprise. The way we look at Amazon (NASDAQ:AMZN) or Microsoft (NASDAQ:MSFT) is how many India-based investors view SIFY stock.
For one thing, Sify has a history of delivering technological innovations to its home nation. According to its website, “In 1998, we were the first Indian private ISP. Millions experienced the Internet for the first time on the Sify network. We pioneered the Internet café and voice and data services for international call centers.” Today, Sify is a leader in India’s information and communications technology (ICT) market.
That’s a great sector to serve, considering that the country’s ICT spending has significantly increased from 2013 to 2019. True, the pandemic disrupted spending in 2020. However, the IT portion of the ICT market should recover noticeably by the end of this year.
Admittedly, I’m not a big fan of chasing shares after they’ve moved wildly higher. However, if SIFY stock goes on a discount, you may want to consider picking some up for the long term.
Mahanagar Telephone Nigam (MTENY)
Although it’s traded in the over-the-counter market, you don’t want to dismiss Mahanagar Telephone Nigam offhand. A state-controlled telecommunications provider, Mahanagar provides mobile services to Delhi city (population of over 11 million per India’s 2011 census) and Mumbai city (population 18.4 million). With connectivity being crucial for the 21st century economy, MTENY stock is inherently relevant.
Not only that, outside investors are probably looking to companies like Mahanagar as viable upside opportunities. Laura Gonzalez, Ph.D., associate professor of Finance at California State University, Long Beach, explains that:
“Investors are already looking at opportunities in other markets, such as India. These are young big markets where financial inclusion is achieved for millions of people directly through their phones. The difference is that in India the flow of information and discussion about government policies etc. is more fluid and benefits firm competition and growth.”
Sure enough, MTENY stock has been gaining strong momentum recently, up 36% in the trailing month. As India develops further, Mahanagar can tag along for the ride.
Rediff is easily the riskiest company among this list of Indian stocks, and perhaps the riskiest in the country. Now, I can’t be 100% certain about this last point. However, Rediff.com doesn’t make a good case for itself in terms of what conservative investors are looking for. With REDFY stock trading for just a dime as I’m writing this, the equity share isn’t for the faint of heart.
At the same time, if you’re looking for a lottery ticket in the international markets, this is it. Over the last six months, REDFY stock has charged higher to the tune of nearly 267%. That’s ridiculously impressive for the news and entertainment website, but can this momentum last?
Fundamentally, it’s possible, though I don’t want to say it’s probable. According to data from eMarketer, most daily media consumption in India occurs via television (3.1 hours), then digital (1.39 hours). If the country follows trends in developed nations, then the digital market share could increase dramatically.
That’s what makes Rediff one of the intriguing Indian stocks to consider. However, this is only for the speculator. You have been warned!
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.