Don't Ignore Indian Stocks

NEW YORK (TheStreet) -- The Indian economy may not have been in the headlines this year due to a troubled Europe and a slowing China, but investors that have been paying attention to Indian stocks have been greatly rewarded, said Adrian Lim, senior investment manager for The India Fund (IFN).

Welcome to TheStreet's Fund Manager Five Spot, where top fund managers give their best stock picks and views on the market in a five-question format.

After many years in the spotlight as one of the high-flying BRIC countries, Indian stocks have been off the radar for a while. What have investors been missing?

Lim: They've been missing a lot actually. The India Fund has gained approximately 21% so far this year and that is in line with steady fundamental growth in a market that is relatively insulated fundamentally from global demand.

What is your top stock pick?

Lim: We like HDFC (HDB), a mortgage giant with interests in insurance and commercial banking. It has a strong professional management team that has managed strong growth and balanced that with prudent capital management.

What is your top "sleeper" or "under the radar" stock pick?

Lim: Hero MotoCorp could be a "sleeper." Its the leading motorcycle manufacturer in India, but is well positioned to take on exporting into the emerging markets globally over the next five years or so. Investors may be more familiar with Tata Motors, but Hero is still a great stock even if it is off their radar screens.

What stocks or sector would you sell or avoid right now?

Lim: We don't have a lot in the energy sector in India. There is traditionally a lot of regulatory uncertainty in India's energy sector -- both upstream and downstream -- so we tend to avoid it.

What is your outlook for 2013?

Lim: We expect GDP growth rates to moderate from 8% to 4%-5% over the next year or two. Nevertheless, we expect our holdings to outperform this lowered rate. In our opinion, our portfolio is resilient and poised well for the time when GDP growth goes back up to 6%-8% again.

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.