India’s Sensex Booming as 50% of Companies Generate over 100% Returns in Six Months

Oct. 12 – Stock prices in India’s main Sensex market have increased by 78 percent in the six-month April-September period and over half of all listed companies have doubled in value.

Of the top five, Tata Motors increased 228 percent, Jaiprakseh Associates, the infrastructure development firm, increased 182 percent, ICICI Bank jumped 172 percent, India’s largest real estate firm DLF grew 162 percent, and Larsen & Toubro, the country’s construction giant increased 150 percent according to a survey carried out by ETIG, the economic data research group.

Share prices of other corporations such as Tata Steel, Hinalco Industries, Wipro, Reliance Infrastructure, Mahindra & Mahindra, Maruti Suzuki and Sterlite Industries also more than doubled. The returns have been triggered by massive inflows from overseas institutional investors, in addition to domestic investors returning to the stock markets after the scares of the global downturn and India’s exposure to subprime debt. Industry sectors that have outperformed the Sensex gain of 78 percent include infrastructure, autos financing and steel, as India’s long awaited desire to develop its national infrastructure reached a turning point with the Congress Party election victory in May.

Chris Devonshire-Ellis, the managing partner for Dezan Shira & Associates in India and publisher of 2point6billion.com said that growth in India is poised to outstrip that in China. “Although markets remain volatile and will do so for awhile due to factors external from India, the fundamental domestic strengths of the performances by these very sound Indian corporations indicates that the world’s financing is indeed coming to India and will be heavily involved in funding its infrastructure requirements,” he said.

India, Devonshire-Ellis believes, is entering a boom time for growth just as China did fifteen years ago. “Now is the time to get serious about India as global financing is now concentrating here.”