India’s Sensex passes 10,000 - Not too late to get in

February 1, 2006

The Bombay Stock Exchange's Sensex index passed the key 10,000 point level for the first time. This was based on the government’s report that GDP will pass 8% this year, up from 7.5% last year. This growth is driven by the following:

• Manufacturing - 9.4%
• Construction - 12.1%
• Service industry (hotels, transportation and communication) - 11.1%.

Much of this growth is a result of the government’s investment in infrastructure, particularly railways (10.8% growth), ports (10.9% growth) and telephone connections (35.2% growth).

What it Means:
Although the 10,000 level is a record high, it is based on real, solid economic growth. India is doing the right thing - investing in its own country while economic times are good. This investment is resulting in an increase in per capita income of around 6% per year. This contributes to domestic demand, so that over time India will be less reliant on exports to the U.S.

Action Steps:
Check with your financial planner on the amount of India stocks that are in your Asian mutual fund. It wouldn’t hurt to add to this allocation.

Source: Government of India, Advance Estimates of National Income, 2005 - 2006

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