Yet Another Reason to Buy India ETFs Now - ETF News And Commentary

There is no looking back for the Indian stock market as investors seem completely mesmerized by ‘Modi mania'. The market shook the world at the start of this year on hopes of a change in government and an end to the dysfunctional policies taken by the Congress-led regime. Finally, India saw the much-anticipated win of Narendra Modi-led Bharatiya Janata Party (BJP). Modi is considered as a pro-growth leader, whose victory led the market to skyrocket in late May.

Though the Indian equities succumbed to a correction in the month following the election win on profit booking activity, the flair for India investing hasn't been erased from investors' minds. As a result, the stock market has seen a spike every now and then so far this year. Robust corporate earnings, a

-year low level of inflation in August and an improving economy spurred investors to put their money into this market.

Moreover, the rating agency Standard and Poor's upped India's credit outlook to "stable" from "negative” though the organization reiterated its BBB- rating on long-term Indian debt.

, the S&P might consider an upgrade in India's credit rating if its growth accelerates and ‘fiscal, external, or inflation metrics' perk up.

Notably, the agency cut India's outlook to “negative” over two years ago (read:

).

Along with several analysts, we believe that the S&P's new step can shore up India's bond market thanks to a renewed investor interest which in turn will likely strengthen its currency rupee. This is especially true in the light of the potential interest rate rise in the U.S. next year.

Emerging market debt has always been an area of interest for yield-hungry investors. However, the only drag is credit risk. Thus, any improvement in the credit status might shield the fixed income products against the expected sell-off and currency depreciation in 2015.

With the rupee finally arresting its declining trend, inflation apparently in check, global fuel prices not likely to shoot up in the near term, little-but-positive view of rating agencies like the S&P, many investors have decided to take another look at India ETFs (read:

).

Though India ETFs declined in the week ended October 3, most of the ETFs appear convincing bets for the long term. Financial stocks have so far registered stellar gains.

noted that the present rally in the Indian stock market is being backed by banks and infrastructure stocks. This indicates that a look at the ETFs with a tilt toward the financial sector a good idea, including some of the ones we have listed below:

is such an ETF with about one-fourth of assets invested in the financial sector. Consumer discretionary takes the next spot with about 20% exposure. Moreover, tapping a small-cap ETF is surely a decent bet in the current context as these pint-sized stocks normally revolve around the domestic economy and is less exposed to global events. SMIN – a Zacks #3 ranked ETF with a Medium risk outlook (read:

).

India has a huge middle income population. As per IBEF, consumer spending in India will likely see a twofold growth within 2025. One might capitalize on this growing trend by investing in INCO. This overlooked choice invests about $9 million in automobiles and personal goods industry in proportions of 36% and 25% respectively.

INP seeks to match the performance and yield of the MSCI India Total Return Index. iPath MSCI India Index ETN does not hold any securities. However, the index holdings bear particular importance to the overall performance of the ETN. The index has heavy weight on Financials (30.0%) followed by Information Technology (16.1%), Energy (12.7%) and Consumer Staples (11.9%) (read:

).

Want the latest recommendations from Zacks Investment Research? Today, you can download

.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.