India: Fools Rush In?
India is sweeping investors off their feet with its allure and promises of great rewards. I, for one, am fascinated by the country’s huge growth potential. But instead of diving in head-first, it's crucial to do your research and get a solid grasp of the market's nuances before going all in.
To fully understand a country you’ve got to be there in person — roam its streets, chat with the locals, and soak up everything around you. That's exactly what I did during my recent month-long journey, where I got to visit nine amazing cities across India.
We started our journey from Jaipur, the colorful city marked by terracotta buildings, widely known as the Pink City. With its pink facade and symmetrical architectural splendor, Jaipur could easily be mistaken for a set in a Wes Anderson film, where every corner seems to await a quirky, color-coordinated character.
From Jaipur, we decided to take a seven-hour train ride to Udaipur, the City of Lakes. Because of the warnings and collective gasps of "No, don't do it!" from those we shared our plan with, we opted for the more luxurious “executive chair car” on the Vande Bharat Express, instead of the standard class. At US$30 per person, the ride far exceeded our expectations with comfortable reclining seats, two full meals of delicious Indian food and great service.
Arriving in Udaipur, we were instantly struck by its breathtaking lakeside setting – no wonder it's a favorite location for movie shoots, including the James Bond classic “Octopussy”. The star attraction is the City Palace on Lake Pichola, a 400-year-old sprawling complex with palaces where the Mewar royals still live in parts. This maze of stone and marble, filled with hidden treasures and museums, tells stories of its past and could keep you exploring for days.
While in Udaipur, we came across a group of software engineers on a company outing. They were smiling ear to ear and seemed very approachable so we started chatting. They spoke highly of their company culture, so I quickly took the company’s name. Seeing how happy and tight-knit they were, I thought to myself, “This company is likely going places!”
After Udaipur, we flew to Mumbai to attend the Morningstar Investment Conference. We were put up at Hotel Sahara Star, a quirky hotel near the airport known for its connection to a major financial scandal. Regardless, it was a comfortable stay. I was surprised by the scale and sizable turnout at the conference, which could be an indication of a growing popularity of mutual funds in India.
While in Mumbai we also visited the Jio World Plaza, a newly opened, enormous luxury mall owned by the giant Reliance group. My inner movie buff was excited to find out that it has a drive-in theater and an interesting Bollywood movie poster museum.
In Hyderabad, the contrast between the historic old city and the modern skyline dotted with global corporations is striking.
Notable attractions include the Ramoji Film City. Sprawling over 1,666 acres, it‘s the world's largest film studio and is chock-full of sets that could rival Disney's variety. All this cinematic magic? Just for Rp 1,350 (around US$16) per person.
Hyderabad's historical significance is underscored by the renowned Golconda diamond mines, the source of the famous Koh-i-Noor, now in the possession of the British.
In addition to the ancient monuments in Hyderabad, there are some more recent ones, such as a memorial honoring the students who were shot by government troops in 1969 during demonstrations for a separate Telangana state.
We flew from Hyderabad to Tirupati on Indigo, a low cost but comfortable airline. Stepping into the Taj Tirupati hotel, we were given golden embroidered shawls as gifts — a traditional Indian welcome.
I was surprised to find a framed photo of myself in my room. They really go the extra mile for their guests!
In Tirupati, we went on a temple tour, starting with a climb to a revered spot where Lord Venkateswara arrived on earth, amidst a crowd of pilgrims. We visited unique sites including a rare natural stone arch and a park with Hindu god statues. At the Tirumala complex, we observed thousands of pilgrims and participated in customary rituals. Our visit included the Iskcon temple and concluded at the Srikalahasti complex, known for its devotee Kannappa’s legendary sacrifice of both of his eyes to the god.
Our next destination Chennai has a special place in my heart because I first came here in the 1970s when it was still called Madras. I came as a consultant with the UNDP. Of course now the city is transformed.
In Chennai, we visited Fort St. George, a historical British fortress now hosting the Tamil Nadu government, with a museum showcasing military artifacts and a statue of General Cornwallis. We also explored the intricate Kapaleeshwarar Temple, dedicated to Lord Shiva.
Our final stop in Chennai was St. Thomas Cathedral, a notable site where several Popes have visited and the burial place of St. Thomas, one of the 12 apostles and a missionary in India. The cathedral museum displays artifacts from his life.
We spent Diwali - the most important festival in the Indian culture, in Kochi, a major port city in South India and plays a significant role in the country's trade and commerce.
We hopped on a three-wheeler and let our driver guide us through a tour of landmarks from the ancient spice trade era. This area was once a hub for the Romans, Persians, Arabs, and Chinese. In 1503, the Portuguese established their first colony in Fort Kochi, marking a significant historical milestone. Earlier, in the 1400s, the famous Chinese admiral Zheng He visited with his grand treasure fleet. Among the key attractions we explored were the iconic "Chinese fishing nets”.
We also spent time at the serene Papavinashanathirtham Shiva temple and the artifact-rich Mattancherry Palace.
Our adventure concluded in Jew Town, a unique area known for its shops, synagogue, and a centuries-old tradition of providing refuge to Jews since 75 AD.
Our next destination Bengaluru is known as the “Silicon Valley of India” since leading information technology software exporters like Infosys and Wipro are headquartered there. On our arrival we were given the traditional greeting with a bindi spot on our forehead. The next morning we started with a visit to the impressive state legislature building with its statues of famous leaders including Nehru.
In order to get to the main train station we took the modern spotless subway with interesting tokens picturing famous places. (One of the delightful things about India is the penchant to elaborate and add artistic touches.)
At the main train station I was surprised to see a display honoring Lord Dalhousie, the former Governor General of colonial India who introduced mass education, passenger trains, the electric telegraph and uniform postage. There was also a display with PM Modi about the digitization of India.
Leaving Bengaluru I was struck by one of the most beautiful airports in the world. Designed by Skidmore, Owings & Merrill (SOM) built in four years it’s spread over a mammoth 255,000 square meters and is designed as a “terminal in a garden” with a bamboo-like motif and greenery everywhere. At the airport entrance was a giant statue of Bengaluru’s founder Kempe Gowda in the 1500s.
Finally, Goa offered a blend of beach life and Portuguese cultural remnants. We explored the Fontainhas neighborhood and the Basilica of Bom Jesus, holding the remains of St. Francis Xavier.
This month-long trip revealed the incredible depth and variety of India's cultural landscape. I met many enthusiastic entrepreneurs and software engineers, and was deeply impressed by their positive spirit and enthusiasm to improve their companies and work.
Given my optimism for India's future, I'm often asked about the right time to invest in this market, currently labeled as "overvalued" by some analysts.
In my view, traditional stock valuation metrics like price/earnings ratios often overlook the future growth potential of many Indian companies. While the current P/E ratios may seem high, they primarily reflect past performance and don't fully capture the prospective rapid growth in earnings, potentially making Indian stocks more attractive in the long term.
Investment timing should focus on solidly growing companies, as there are always opportunities to find firms that excel regardless of the market's overall state.
For newcomers to the investing world, particularly those unable to research individual stocks, I would recommend choosing a well-diversified mutual fund managed by experienced and reputable investment professionals. This approach offers a balanced entry point into the Indian market.