India: Bulls Are Running to India, Raising Fears of a Bubble(New Bubble!)

http://www.nytimes.com/2006/04/18/business/worldbusiness/18india.html ^ | 04/18/06 | SARITHA RAI

[TigerLikesRooster]

April 18, 2006

Bulls Are Running to India, Raising Fears of a Bubble

By SARITHA RAI

BANGALORE, India, April 17 — Shashibhushana Reddy, a 28-year-old software professional with the local division of the Intel Corporation, has invested a quarter of his earnings in India's equity markets for the last three years.

Mainly choosing media, pharmaceutical and manufacturing stocks, he has seen his investments triple as he rides a boom in the country's equity markets.

Now Mr. Reddy is preparing to get even more aggressive. "Indian companies are doing extremely well," he said, "and I plan to soon start investing half my earnings in the stock market."

Thanks to investors like Mr. Reddy, the bellwether Sensex stock market index in Mumbai soared 45 percent in 2005, and it has already risen 20 percent in the first three months of this year. The impressive gains have been spurred by India's surging economy, which posted a growth rate of 7.5 percent last year.

At the same time, the country has attracted more overseas investors, who poured $10.7 billion into Indian equities in 2005, and $4.13 billion in just the first quarter of this year.

But analysts and fund managers are cautioning that the stock market pendulum may have swung too far, and they warn that some companies are highly overvalued.

As a result of such concerns, the Sensex recorded a two-day decline of 3.6 percent last Wednesday and Thursday, the steepest in six months. The markets were closed Friday for Good Friday, but investors saw a buying opportunity Monday, sending the index up 2.7 percent.

[hinckley buzzard]

Outside the U.S., China is already treated as 'a' superpower under the assumption that "before long" it will be 'the' superpower,

Great deal of anti-American wish-fulfillment in that sentiment. Russia had Potemkin villages. China is a Potemkin economy.

[truth_seeker]

The resident expert FR Bubble Expert and Warning Crier "ex-Texan" must be notified immediately.

[Arjun]

There isnt really a bubble. The Forward P/E ratio of the Bombay sensex is around 20 which is actually attractive since earnings growth is ableto keep up nicely.