Indian ETFs Up On Announced Reforms from New Central Bank Chief

Jacob Harper  |

The Indian economy has been battered this summer, as their currency has fallen precipitously in value and their outdated corporate laws have pushed out foreign investment, exacerbating the country’s economic woes. However, analysts expressed renewed confidence in the emerging market, with the Sept 4 installation of respected former IMF chief economist Raghuram Rajan at the head of the country’s central bank.

The new central bank chief has already said he will explore “all options on the table” to stop the rupee’s drop and restore growth to the Indian economy. This includes issuing the first ever sovereign bonds, which could reign in the country’s unsustainable current account deficit.  

Rajan’s second order of concern after propping up the rupee is to address the country’s archaic corporate laws. The 57-year-old system has been cited as a major reason why overseas entities are hesitant to invest in the country’s corporations and inject much-needed outside capital into India.  

The plain-spoken Rajan is famous for being one of the few economists in the world to point out the risks of the subprime mortgage market that caused the global financial meltdown, and was referred to by Singapore-based economist Rajeev Malik as a “rock star academic.”

Rock star or not, foreign investors appear to believe Rajan can right the country’s troubled economy, one that slowed to 4.4 percent growth in the first quarter this year.

iPath MSCI India Index ETN (INP) is up 6.04 percent to hit $46.00 a share. PowerShares India ($PIN) jumped 5.7 percent to hit $14.68 a share. The popular WisdomTree India Earnings ($EPI) gained 5.13 percent to hit $14.13.

The leveraged Direxion Daily India Bull 3X Shares ($INDL) was a big winner on the day, jumping 16.02 percent to hit $34.40 a share.


(image of Rajan courtesy of WIkimedia Commons)

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