Brand Equity

If India were a stock. . .

February 27, 2006

BSE Sensex

Price on reco. date (Rs)

10,201

52-week High/Low

10,305 / 6,118

Free float (%)

59.8

Market cap (Rs bn)

12,922

Share price chart

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Rs 100 invested is now worth...

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India: Buy or sell?

"If India were a stock, would you buy?" This is what we'd asked our readers two years back. In the past two years, much has changed in the country's economy, politics and stock markets.

While the economy continues to show strong momentum on the back of robust growth in industrial and services sectors, the stockmarkets (as barometer of economic progress) have rewarded holders of the India story. However, the country's political character, led by the Left's bickering, has continued to deteriorate.

In this article, thus, we provide you with an update on India as an investment option - an asset class. Kindly note that some of the points from the previous report have been carried forward along with the adequate additions/deletions to/from the investment rationale and concerns.

Note: Hereunder, 'India' is used to refer to as a diversified company and a listed stock

Investment Rationale

The essence of democracy: One of the foremost reasons to buy India is its democratic setup, which allows everyone to have a voice. The management (government) is the elected representative of shareholders (general public) and is put to test every five years by way of general elections. If a government fails to address the broader needs of the populace, they are punished. This is what allows the nation to introspect and to grow as per its aspirations.

The 'internal' India story: As per the NCAER, on the back of the economic transformation that India has witnessed since the opening up of the economy in the early 1990s, the middle-class has blossomed in the country, growing by around 10% to 12% per annum. This transformation has been fed partly by the explosion of new jobs for the young populace, primarily...