OREANDA-NEWS. India's industrial output grew more than expected in April, reaching a two-month high, while its inflation rate – Asia's second-fastest – advanced in May from the previous month. Reserve Bank of India (RBI) Governor Raghuram Rajan on June 2 cut interest rates for the third time this year and said he’d wait to assess the monsoon before acting again. Since the start of the season on June 1, India’s monsoon rainfall has been above normal, with most of the nation receiving excess to normal showers, easing  concerns a severe drought would spark a surge in food prices. While gross domestic product (GDP) expanded 7.5% in the first three months of the year, gross value added – a ‘productivity’ component of GDP closely watched by the RBI – gained 6.1% versus an estimated 7.0%.

MSCI India Index

The MSCI India Index is designed to measure the performance of the large and mid-cap segments of India’s stock market. The index currently has 64 constituents and covers approximately 85% of the Indian equity universe. In the year-to-date, the Index, in US Dollar terms, has gained 1.3% in price and 2.0% in terms of price and dividends. Since 12 June, the Index has gained 5.8%. The Index currently trades at a price-to-earnings ratio of 23.5 and generates a 1.5% dividend yield.

The MSCI India Index maintains a historically low correlation to the Straits Times Index (STI), which is currently at 27% after rising as high as 55% in February and dropping as low as 10% in September. With its variance in correlation and performance, the Exchange Traded Fund (ETF) that tracks the MSCI India Index has provided investors with a diversified portfolio product. In the year thus far, the iShares MSCI India Index ETF has gained 3.6%. In 2014, the ETF gained 22.4% after declining 5.9% in 2013. Furthermore, the iShares MSCI India Index ETF has been SGX’s most actively traded ETF by turnover in the year thus far. As noted in a Market Update earlier in the month, the iShares MSCI India Index ETF has averaged a quoted spread of 3.2 cents over the preceding 12 months.

The iShares MSCI India Index ETF is now non-SIP - otherwise referred to as EIP - Excluded Investment Product. Like ordinary stocks EIPs can be bought and sold by individual investors without having to complete a Customer Assessment Review, or take the online SIP test. This is because an EIP ETF generally invests in a basket of stocks that make up the index it is designed to track, rather than a derivative product that derives its value from the index.

Largest India Plays

The three largest capitalised stocks that report more than 50% of their revenue to India are Sarine Technologies, Ascendas India Trust, and Religare Health Trust. They represent three different industries – Machinery, Real Estate Management and Development, and Healthcare Providers and Services – according to the Global Industry Classification Standard (GICS®).

These three stocks have a combined market capitalisation of S\$2.5 billion, and trade at an average price-earnings ratio of 22.4. Their average indicative dividend yield is 5.5%.

They averaged a 3.0% price gain and dividend-boosted returns of 5.6% in the year thus far. The companies had one-year and three-year average returns of 9.8% and 85.8% respectively. The stock that generated the highest return year-to-date was Ascendas India Trust (+13.3%), followed by Religare Health Trust (+4.7%) and Sarine Technologies (-1.1%). Ascendas India Trust is currently trading closest to its 12-month high, followed by Religare Health Trust and Sarine Technologies.

Portfolio  Application & Reduced Board Lot Sizes

Based on the current prices of the iShares MSCI India Index ETF and the trio of Ascendas India Trust, Religare Health Trust, Sarine Technologies, a portfolio that was approximately 50% balanced to the ETF and 50% near evenly balanced between the three stocks could be accessed for approximately S\$6,000. The three stocks and the ETF have minimum board lot sizes of 100 shares. Over the past two and half years, this educative example of a India focused portfolio outperformed both the NSE Nifty Index and BSE Sensex Index.

The table below is sorted based on market capitalisation. Note that clicking on a stock name will take you to its relevant page on SGX StockFacts.

Name SGX Code GICS® Industry Name Mkt. Cap. in S\$ mm Price vs. 12M High % Price vs. 12M Low % P/E
Sarine Technologies
U77 Machinery 841 -25.8 28.2 33.2
Ascendas India Trust
Y6U Real Estate Management and Development 836 -4.7 25.7 12.6
Religare Health Trust
 RF1U Healthcare Providers and Services 803 -11.4 14.8 21.4

Source: SGX StockFacts (data as of 23 June 2015)

Name SGX Code % Price Change YTD % Change - Dividend Adj. YTD % Change - Dividend Adj. [1 Year] % Change - Dividend Adj. [3 Years] Div. Ind Yld. in %
Sarine Technologies U77 -2.4 -1.1 -7.1 127.5 2.7
Ascendas India Trust CY6U 10.4 13.3 19.7 44.1 5.9
Religare Health Trust
 RF1U 1.0 4.7 16.7 N/A 7.9
Average   3.0 5.6 9.8 85.8 5.5

Source: SGX StockFacts (data as of 23 June 2015)

Ascendas India Trust

Ascendas India Trust owns real estate properties primarily used as business space and real estate-related assets in India. It develops, owns, and manages information technology parks and focuses on acquiring, holding, and developing land or uncompleted developments to be used primarily for business purposes. Ascendas India Trust was formed in August 2007 and is based in Singapore.

Religare Health Trust

Religare Health Trust provides medical and clinical establishment services in India. It was the first business trust with a portfolio of healthcare assets in India to be listed on the Main Board of the SGX-ST. It has a portfolio of 11 clinical establishments, four greenfield clinical establishments, and two operating hospitals. The company was founded in 2011 and is based in Singapore.

Sarine Technologies

Sarine Technologies develops and manufactures planning, evaluation, and measurement systems for diamond and gemstone production in India, Africa, Europe, North America, Israel, and internationally. The company also aids in key aspects of the polished diamond trade, such as the grading of a polished diamond's cut and light performance. Sarine Technologies was founded in 1988 and is headquartered in Kfar Saba, Israel.