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Old January 5, 2008, 06:13 AM
Ankesh's Avatar
Ankesh Ankesh is offline
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Join Date: Sep 2006
Location: Mumbai, India
Posts: 689
Default Money Making Opportunities in India

India is Hot right now! Here is a quick snapshot on India:

Stock Market

Stock market in India is going through a huge huge huge boom. In the last 6 months, 3 out of 10 stocks have doubled in value! So even if your entire strategy is to use a dartboard to select stocks, you will still grow your investment by double digit percentage points!

If you are smart and have a better trading strategy, earning 40-50% returns is easy. I've seen a lot of people double their investments this past year too.

(Personally speaking, I've been doing a lot of investing in the stock exchange since the past few months.)

The cons of stock trading in India:

1. Finding information is not as easy as its in USA. Especially for value traders. I remember while in USA, all I used to do to evaluate stocks is use quicken.com's online screening tools. (I've heard that quicken has removed their screening tools since then... but I'm sure a few other alternatives will be available.) It used to take me 10 minutes to research a stock in USA. It takes me 2-3 hours to do the same research in India.

There are no low cost or free screening softwares available in the market - that allows you to say for eg: find the stock with the lowest p/e ratio in a particular industry. (Stock exchange softwares are an untapped opportunity). There are a couple of very expensive softwares available though - that the institutions use.

2. Risk protection. No broker understands the term "trail loss" in India. So you have to calculate your own trail losses and call your broker when the price goes below a certain number to sell. This is a bit time consuming - especially if you are a day-trader and deal in lots of stocks.

But even then, its a good idea to invest in the Indian stock market right now. How can someone outside of India invest in the stock market?

I'm not completely sure of all the details, but how many people do it is: they open an offshore company in Mauritius (which has a double tax treaty with India). And then trade in the stock market via that offshore company.

You may find more information over here:
www.ocra-mauritius.com

Import-Export / Domestic Economy

Because the dollar is depreciating, businesses that export have taken a hit. Chinese goods are getting cheaper compared to Indian goods too.

On the other hand, businesses that import and sell in India are doing extremely well. We are seeing a lot more multinational brands coming to India and opening shops.

Domestic economy has never been better. Retail marketing is going extremely strong. I just heard a few weeks back, that one company is opening 400 jewelry outlets within 1 year in India!

The local brands have started expanding. (Because Indians usually don't like taking loans to expand, there are very few big local brands in India that have 300-400 outlets yet. But I see things changing very quickly.)

I think the idea of franchising will pick up really quickly too. Right now, only international brands like McDonalds sells franchises in India.

Remote marketing is very nascent in India. I've not seen a single full-page direct response text ad in newspapers yet. (The full page ads in India typically have one big picture with some fluffy words underneath it.)

2 downsides to selling to consumers via direct marketing are:

1. Language problem. You usually have to get your ads translated for different newspapers in different states.

2. Lack of credit cards. Although this is improving, right now - you have to offer cheque and cash-on-delivery payments. So sustaining subscription or recurring billing based business models is a lot harder.

Starting an outsourcing company is still profitable in India - but not as profitable as it was just a couple of years back. And thats because - besides the declining dollar, salaries in India are increasing by a big margin too.

Infrastructure

A lot more roads are popping up - connecting cities in India with quicker expressways.

New airports are coming up too. I've heard that Bangalore and Hyderabad both will have new better and bigger airports within this year. (They just announced to start building a new airport in Navi Mumbai (which is like a suburb of Mumbai) and the land prices over there sky rocketed!)

Traveling infrastructure is improving very quickly. But along with that, the number of travelers is increasing too! And we'll also see a Rs.100,000 car ($2500) launched in India this year. So a lot more poorer people who were just buying bikes till now will start buying cars too.

Cell phones are booming in India too. I think the cell phone technology is advanced in India than it was in USA.

What is lacking is: internet speeds. I'm still on 256kbps speed. Surprisingly - internet is a lot more expensive in India and a lot less advanced.

Real Estate

Real estate prices have gone through the roof since past few years. Demand is outgrowing supply as millions of people migrate to cities.

Indian construction scene is a bit sad. Very few safety measures. No one uses mechanical tools. Constructing a house takes 3-4-5 months in India on average. The same house would take just 3-4 weeks in Europe or USA.

From an investment point of view though - its gold to buy real estate in India.

The downside? Not many. One downside is: no one understands the concept of seller financing. I've never heard of any zero-money-down real estate deals happen in India.

But other than that, the real estate market is pretty good in India.

--

Let me know if you have any questions about India and I'll do my best to answer.

Last edited by Ankesh : January 5, 2008 at 06:45 AM.
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