NEW YORK ( TheStreet) - A slew of concerns such as the European debt crisis, corporate governance scandals, soaring inflation and higher valuations recently have impacted the performance of Indian stock markets.

However, in terms of absolute performance, India compares favorably and posted better returns than other emerging markets like Brazil and China during 2010. Brazil had a flat year in terms of returns, while India and China delivered 14% and negative 10% returns during the year, respectively.

Indian stocks have been major outperformers during the last two years and are trading at a relative premium compared to markets like Brazil and China. Nonetheless, Indian markets are looking attractive and investors can add quality stocks in the near term. The International Monetary Fund forecasts India's economy to grow at 8.4% during 2011, although with inflation, it is likely to cool off from 13.2% during 2010 to 6.7% by 2012.

Based on growth prospects, we have selected five stocks: HDFC Bank ( HDB - Get Report), ICICI Bank ( IBN), Tata Motors ( TTM), iGate ( IGTE) and Sterlite Industries ( SLT - Get Report) for attractive returns during 2011 and beyond. In addition, these stocks appear lucrative after the recent correction.

These stocks span diverse industries, namely financials, metals, information technology and auto. The stocks are stacked in terms of upside, great to greatest.

5. Sterlite Industries ( SLT - Get Report) is a global player in the metals and mining sector, with a diversified portfolio consisting of non-ferrous metals.

Hampered by regulatory restrictions at its Tuticorin and Orissa projects, the stock had been underperforming the broader market indices. However, any positive news from its proposed acquisition of the government's minority stakes in Bharat Aluminum and Hindustan Zinc would be a positive trigger.

The company generates about half its revenues from its copper business. The recent disturbances in Chile and the introduction of copper-related exchange traded funds buoyed copper prices, which is a positive for Sterlite

The company has a strong balance sheet with cash and cash equivalents of $6 billion. The company can use the cash for organic and inorganic opportunities.

On the operational front, production ramp up at its new smelters will augment volumes. Additionally, the strong performance of its power and zinc segments could improve its earnings profile. The stock is trading at 8 times its 2011 to 2012 earnings.

4. Tata Motors ( TTM) is one of the largest commercial vehicle manufacturers in India operating globally through its subsidiary Jaguar Land Rover.

The uptick in industrial activities is expected to push commercial vehicle manufacturers like Tata Motors. A turnaround in JLR operations would also augur well. The big leap in JLR volumes following the launch of new models and strong demand for luxury cars would sustain JLR's impetus in the future.

However, the market shares across domestic passenger vehicle segment had seen a dip in the last few months. Overall, the domestic car revenues are about 7% of its consolidated revenues.

The company cleaned up its books from excess debt. Equity issuance and divestment ensure that leverage is under manageable levels of 1.2 times, compared to 4 times a couple of years ago. The stock is trading at 8 to 9 times its estimated 2011 earnings.

3. HDFC Bank ( HDB - Get Report) is one of larger private banks in India with a retail focus.

The bank underperformed the banking benchmark recently. However, we expect the bank to outperform after the recent volatility witnessed in banking stocks. A track record of consistent performance and management bandwidth ensures that downside risks are capped.

HDFC management indicated that its loan growth would be 3% to 7% in excess of systematic growth. Consequently, net interest income growth would be robust due to higher loan growth and stable net interest margins.

Overall, asset quality is likely to improve, given the strong growth impulses in the economy. However, earnings could be impacted from probable losses from microfinance institutions and HDFC's exposure to the telecom industry.

HDFC has a strong base of low-cost deposits and is a value pick in the scenario of a rising cost of funds, and the bank is expected to maintain net interest margin of 4% in the medium term.

Besides, a higher capital base, an expanding loan book and a strong net interest margin would deliver earnings growth of 30% over the next few quarters. The stock is trading at 3.7 times its 2012 adjusted book.

2. iGate ( IGTE) is a provider of Information Technology and IT-enabled operations, offering services across a gamut of verticals like financial services and health care.

Revenues for the third quarter stood at $74.8 million, a 52.6% jump compared to same period, last year.

Nonetheless, gross margin dipped 39.4%, compared to 41.1% during the same period prior year. However, operating margin scaled up 20.3% in the September quarter, expanding 170 basis points in the corresponding quarter last year.

Reviewing third quarter results, the company's CEO Phaneesh Murthy said, "Our strong revenue, margin growth and recent client wins are a positive affirmation that our business model and messaging is resonating well with our customers."

Net income rose to $14.3 million, compared to $8.9 million during the same period last year. Higher net profits have strengthened the balance sheet, and Sujit Sircar, iGate's COO, says, "We continue to generate strong operating cash flow and our balance sheet is further strengthened with cash and cash equivalents and short-term investments of over $120 million." The stock is trading at 18 to 19 times its 2011 earnings.

1. ICICI Bank ( IBN) is the largest private bank in India.

The bank's consolidation phase is over and we expect the lender to leverage any normalization in the credit cycle in future. The management had indicated that credit growth would average 15% to 18% in 2011, riding on improved traction in its international operations. Vehicle loans, home loans, and infrastructure lending are other segments that would do well.

With a current account saving account ratio at 44% and an improved liability profile would sustain NIM's net interest margin at around 2.3% to 2.5% during 2011.

In the recent quarter, the addition of bad loans from ICICI's books were negligible, while the bulk of non-performing loan additions ensued due to the merger of Bank of Rajasthan. The bank also achieved the 70% provision coverage ratio target, we expect earnings impact on account of higher credit costs to decline in the future.

Overall, an improving margin profile, steady loan growth and lower provisioning would improve the earnings profile, going forward. The stock is trading at 2.1 times its estimated 2012 book.

>To see these stocks in action, visit the 5 Indian Stocks to Watch portfolio on Stockpickr.

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.