Top 10 India ETFs

NEW YORK ( ETF Digest) -- India remains one of the world's fastest growing economies while also being a democracy. The middle class continues to expand as western companies continue, albeit more slowly, to outsource many jobs to the country. Like other fast growing economies, when growth becomes too hot, inflation issues rise to the surface. When this happens, equity markets tend to become volatile and may suffer more than with other developed markets. With higher betas, (volatility) you tend to always see outperformance on the upside, but the opposite when conditions deteriorate.

The country's demographics argue for good consumer opportunities as well as high infrastructure improvements. The Indian government, owing to its socialist past, continues to move forward, but is still often constrained by the entrenched bureaucracy. 

The New Year saw major India markets gaining nearly 20% January-February. In March, nearly half of those gains were wiped out as fears of inflation and government tightening hit markets hard. India isn't self-sufficient in energy and is dependent on OPEC countries for product which is a major reason the country has refused to join any serious sanctions on Iran.

The RBI (Reserve Bank of India) has hiked interest rates 13 times since March 2010, to tame demand and curb inflation. There is concern about the sharp depreciation in the rupee, which weakened by over 15% against the U.S. dollar during 2011. But now there is hope with inflation falling below 7% that interest rate hikes will end for now. This remains to be seen.

There are currently only 10 ETFs to evaluate for India making a list of "Top 10s" seem rather silly but then that's the way we roll for now. Most investors could probably deal successfully with just three choices for now until AUM (assets under management) build and markets season.

We feature a technical view of conditions from monthly chart views. Simplistically, we recommend longer-term investors stay on the right side of the 12-month simple moving average. When prices are above the moving average, stay long, and when below, remain in cash or short. Some more interested in a fundamental approach may not care so much about technical issues preferring instead to buy when prices are perceived as low and sell for other reasons when high, but this is not our approach.

Members to the ETF Digest receive added signals when markets become extended such as DeMark triggers to exit overbought/oversold conditions.

For traders and investors wishing to hedge, leveraged issues are available from Direxion and generally, but not precisely, should trend with EPI, INP and PIN.