Hold off on India

Article Excerpt

ISHARES S&P INDIA NIFTY 50 INDEX FUND $19.09 (Nasdaq symbol INDY; buy or sell through brokers; us.ishares.com) is an ETF that aims to track the S&P CNX Nifty Index, which represents the 50 largest, most liquid Indian securities. The stocks held by most emerging market ETFs have weakened this year, but the iShares S&P India Fund has been hit especially hard. That’s because the Indian currency, the rupee, has fallen sharply. It’s down more than 31% against the U.S. dollar since January of this year. That fall cuts the value of declining Indian stocks even further for foreign investors. The movement of investor capital from India to a recovering U.S. economy is one of the main reasons for the rupee’s fall. In addition, a series of government measures aimed at controlling capital leaving the country have backfired, accelerating the shift. India still needs to modernize its transportation, communications and electrical infrastructure, and its inefficient, corrupt bureaucracy. However, its economy will…