How to Profit from Improving Relations between India and Pakistan

Indian Foreign Minister S.M. Krishna and his Pakistani counterpart Hina Rabbani Khar met on Wednesday to discuss a range of issues. Although no major political breakthroughs have come from the meeting, the two sides plan to improve trade and travel conditions between the two long-term antagonists and to coordinate anti-terrorism efforts. Since achieving independence in 1947, India and Pakistan have fought three wars, two of which were over the disputed Kashmir region. Although the two sides haven't come close to another full-scale war for quite some time, the fact that the two countries have become nuclear armed powers since their last war makes any dispute between the two more serious than ever. Pakistan may be looking to make new friends as its relationship with the United States has deteriorated in the aftermath of the American raid into Pakistani territory to kill Osama Bin Laden. The discovery that Osama Bin Laden had been in hiding near a Pakistani military academy has caused the United States to question the value of its relationship with Pakistan and the billions of dollars of aid that it sends to the country. Pakistanis have also been angered by what they feel was a breach of the country's sovereignty and have grown weary of frequent attacks by armed American drones within Pakistani territory. With the eventual withdrawal of Western forces from Afghanistan, Pakistan may soon be facing more domestic terrorism if the forces that have been fighting the American led coalition turn their attention on Pakistan. In the current environment, Pakistan seems to want to improve relations with its powerful neighbors India and China. There are a wide range of investment options for those who foresee improving conditions between the India and Pakistan. There are a number of Indian stocks trading on American stock exchanges, including Dr. Reddy's Laboratories

, Infosys Technologies

and HDFC Bank

. All of these companies come from different sectors and are well regarded internationally. Investors looking who would be more comfortable with a more diversified investment have a number of ETFs to choose between. The WisdomTree India Earnings Fund

, the PowerShares India Portfolio

and the iShares S&P India Nifty 50 Index

are three ETFs that investors should look into if they want to profit from the stability that would come from the cooling of relations between these two nuclear armed nations.