India silver price to outpace rise in gold?

A number of factors have vendors looking for big gains in India’s silver prices in 2011, gains that could easily outpace the rise of the price of gold.

Rapidly rising gold prices have made it more acceptable for Indian families to offer gifts of silver rather than gold at their daughters’ weddings. “Only poorest among the poor in India could have thought of buying silver jewelry for the marriage of their daughters some years back,” writes CommodityOnline. A number of factors are driving up demand for silver in India, though, and here are a handful of reasons why silver’s price rise might outpace gold’s in 2011:

1) The high cost of gold. At $1,430 per ounce, the cost of gold jewelry is moving out of reach for low-income Indians. “Silver has emerged as a fashion statement as many people find difficult and unrealistic to buy gold jewelry at these high prices,” John Luckose, the owner of a small gold and silver shop in Kochi, tells CommodityOnline.

2) Fresh investment demand. Year-over-year food inflation is running rampant in India. The rate, as measured by wholesale prices, topped 10 percent (10.05 percent) for the week ended March 12, according to The Economic Times. Inflation is also finding its way into prices for non-food items with manufactured goods inflation at 6.1 percent last month. As prices climb, silver coins and bars present an attractive, low-cost means of protecting assets.

3) The wrong sort of attention. Wearing flashy gold jewelry in India could be enough to get you mugged. “People fear wearing gold jewelry these days as high gold price has led to several incidents of gold jewelry snatching on streets,” Luckose says. “Many customers coming to us say that they feel comfortable wearing silver jewelry.”

4) Some boats rise faster than others. India is the world’s largest consumer of gold. It accounted for around 24 percent of world gold consumption, according to the World Gold Council and the Bombay Bullion Association, and demand for gold as an investment soared 73 percent last year. That sounds like a lot until you compare it to last year’s growth in demand for silver in India. Silver imports climbed more than six times 2009 levels in the first six months of 2010, according to commodities brokerage Karvy Comtrade. If that trend stays intact in 2011, silver’s price rise will likely dwarf gains in the price of gold.

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World’s largest economies in 2050 will look very different

India’s ascent to economic supremacy will be driven by a surging working age population, which will grow more than 40 percent between 2010 and 2050. That should make India the world’s largest economy by 2050.

China’s forecast to overtake the U.S. as the world’s largest economy in just nine years. And by 2050, India will take the crown pushing the U.S. into 3rd place, according to a report by Citigroup, Inc. (NYSE:C). India’s rapid ascent to economic supremacy will be driven by a surging working age population, which will grow more than 40 percent between now and 2050.

“Developing Asia and Africa will be the fastest growing regions, in our view, driven by population and income per capita growth, followed in terms of growth by the Middle East, Latin America, Central and Eastern Europe, the CIS, and finally the advanced nations of today,” Willem Buiter, chief economist at Citigroup, tells USA Today.

Charting the future of the world’s largest economies

Here’s a graphic I’ve put together illustrating the economic changes we’ll see in the coming years:

World's largest economies in 2050

Regardless of how the next 40 years play out, you’re going to want to buckle up. It’s going to be a bumpy ride. “Expect booms and busts,” Buiter says. “Occasionally, there will be growth disasters, driven by poor policy, conflicts, or natural disasters. When it comes to that, don’t believe that ‘this time it’s different’.”

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Gold demand in India shows signs of tapering off for now

February gold imports in India are expected to have plummeted by 55 percent on the back of high food inflation and ‘liquidity problems.’ Don’t expect the decreased demand to last for long, though.

February gold imports in India are expected to have plummeted by 55 percent, according to the Times of India. High food inflation and “liquidity problems” in the country have dampened appetites for the yellow metal in the world’s largest gold-importing country. Record gold prices could also lower demand for gold imports, Bombay Bullion Association president Prithivraj Khotari told the Times.

Still, investors seem to prefer metals to stocks in India. “Bullion trade will remain the preferred epicenter of investors,” DK Aggarwal, managing director at SMC COMTRADE, tells the paper. “Investments in equities are likely to lose sheen in view of emerging market conditions.”

India’s stock market has shed 13.69 percent so far this year. Gold prices suffered a sell-off at the start of the year, but have since recovered in the face of political turmoil in Africa and the Middle East.

India accounts for 20 percent of global demand for jewelry, making it the world’s biggest gold consumer. Demand for the yellow metal could rise in the coming months with the kickoff of India’s wedding season, which will last through May. Winter harvesting season is also underway, and rural households will likely have more disposable income – another possible bright spot for the metal.

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Top 6 best online travel site stocks

The online travel site business is alive and growing. There’s lot of money at stake, too, with the industry expected to grow to $104.6 billion in 2011. Here are six travel stocks to consider adding to your portfolio.

Despite contractual rifts in the industry, the online travel site business is alive and growing. There’s lot of money at stake, too, with the industry expected to grow to $104.6 billion in 2011, per data from market research firm PhoCusWright Inc. Here’s a look at the top six biggest online travel site stocks by market cap:

1) Priceline.com Inc. (NASDAQ:PCLN), $22.4 billion. Priceline’s acquisition-happy strategy appears to be working. The company bought Booking.com in 2004 giving it a foothold in the European hotel market. In 2007, they acquired Asian booking site Agoda. Investors like the company’s momentum with shares in Priceline hitting 52-week highs. The stock’s up 120 percent over the past year. In Priceline’s upcoming earnings report, total gross travel bookings are expected to climb between 36 to 41 percent year-over-year with most of the growth coming internationally, according to All Things Digital. 9.8 million visitors per month in January. www.priceline.com

2) Ctrip.com International, Ltd. (NASDAQ:CTRP), $10.9 billion. Shares in China’s biggest online booking site have traded sideways, rising just 18 percent over the past year. The company also offered lower than expected guidance for Q1 2011, but don’t count them out. Analysts believe Ctrip controls 50 percent of the market in China. www.english.ctrip.com

3) Expedia, Inc. (NASDAQ:EXPE), $5.9 billion. One of my favorite online booking conglomerates, Expedia runs Hotels.com, Hotwire.com, TripAdvisor.com and Expedia.com among other sites. Shares plunged last week after management warned that the company’s profits would take a hit in upcoming quarters after heavy investments in technology and marketing, according to the Wall Street Journal. It could be a great buying opportunity for a company that’s trading at a P/E ratio of 14.8. 15.3 million visitors per month in January. www.expedia.com

4) MakeMyTrip Limited (NASDAQ:MMYT), $997 million. Founded in 2000, MakeMyTrip has grown to dominate India’s online travel industry. During the company’s most recent quarter, gross bookings for air ticketing and hotels surged to $210.6 million – growth of 70.7% year over year, according to TheStreet. Shares in MakeMyTrip are up 10 percent over the past year. www.makemytrip.com

5) Travelzoo Inc. (NASDAQ:TZOO), $723 million. Boasting more than 22 million subscribers from around the world, Travelzoo’s like the Groupon of the travel industry. Subscribers offer up their email addresses to get weekly lists of the Top 20 travel deals from more than 2,000 companies. During the company’s most recent quarter, revenue was up 20 percent year-over-year to $28.5 million and operating profits soared 90 percent year-over-year to $6.7 million. 3 million visitors per month in January www.travelzoo.com

6) Orbitz Worldwide, Inc. (NYSE:OWW), $425 million. Despite robust traffic (7.7 million unique visitors in January per Compete.com), Orbitz has struggled to turn that stream of visitors into profits. Shares are starting to look very attractive after investors have pushed them down 32 percent on the year. In addition to Orbitz.com, the company operates CheapTickets.com – an online ticket exchange that caters to events tickets including Broadway, sporting events and concerts. 7.7 million visitors per month in January. www.orbitz.com

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HDFC Bank turns dominant in India’s credit card market (HDB)

HDFC Bank Limited (NYSE:HDB) looks poised to outgrow its peers in 2011 as it captures more of the credit card market and continues to surprise analysts to the upside.

With rising defaults on personal loans in India, the country’s credit card market has undergone subtle but seismic shifts over the past two years, and it’s beginning to look like HDFC Bank Limited (NYSE:HDB) is poised to come out on top. The company defied market expectations last quarter by reporting a 33 percent rise in net profits.

The number of active credit cards in India has tumbled since March of 2008 from 20.75 million to 10.82 million as of November 2010, according to the Times of India. Unlike most domestic and foreign banks operating in the country, though, HDFC has aggressively grown it’s credit card portfolio.

“Industry officials estimate that HDFC Bank is nearing leadership position, followed by ICICI Bank (ICICI Bank Limited, NYSE:IBN) and SBI Cards,” Mayur Shetty writes in the Times. “Although HDFC has been the most aggressive in card issuance, its card customers are predominantly account holders in the bank.”

Rising interest rates and higher commodity prices will likely crimp borrowing going forward, but the Head of Equities at Ambit Capital, Saurabh Mukherjea, expects HDFC to outperform the sector.

“There will be consensus pullbacks in our FY12 economic growth rates and the banking sector will see some pullback on the back of that,” Mukherjea told the Economic Times. “But by and large the higher quality banking names, HDFC in particular, will outperform the rest of the sector as we enter a softer period from an economic growth perspective.”

The Royal Bank of Scotland ranks HDFC highest among private-sector banks in India, according to Reuters. Analysts there have retained a “buy” rating on HDFC, “hold” on ICICI Bank and “sell” on Axis Bank (AXBK.BO).

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Indian auto sales hit new record in 2011

Car sales in India hit an all-time record high in January of 2011, and luxury car makers like Mercedes-Benz are renewing their push into the country.

Car sales in India hit record numbers last month surging 26 percent year-over-year in January. All told, 184,332 units were sold, according to figures from the Society of Indian Automobile Manufacturers (SIAM). That bested October 2010’s all-time record of 182,992 units. Still, auto manufacturers have cautioned they expect sales rates to start declining for several reasons:

   •  Rising inflation has prompted the Reserve Bank of India to harden the interest rate seven times in the last 12 months.
   •  Higher gas and oil prices will likely dissuade consumers who are considering buying their first cars.
   •  The Indian government is considering raising the excise duty by 2 percent to bring it back to pre-recession levels.

“The highest growth rate of overall sales this fiscal (year) was seen in October at 45 percent. From that, we are now coming down to just about 18 percent,” SIAM senior director Sugato Sen said.

That’s much slower than 2010’s 30 percent growth rate, but it’s also more sustainable. At least one company is betting the luxury car market will show outsize growth in India in 2011, though. Mercedes-Benz announced its renewing its push into the country with the introduction of its $1.1 million Maybach. Luxury car sales surged 80 percent in India last year.

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Top 7 features in the world’s most expensive house

$2 billion buys you a lot of perks. Here are Top 7 features in the world’s most expensive house.

The 22-story Mumbai tower built by Mukesh Ambani, head of the India-based petrochemical giant Reliance Industries, Ltd. (BOM:500325), carries a hefty price tag of $2 billion. That’s more than twice the gross domestic product of Liberia (a country with 3.4 million people), and it puts the compound, dubbed Antilla, in its own class. It’s nearest competitor is the Villa Leopolda in Cote d’Azur, France, which is worth a paltry $525 million, according to PalScience.com.

$2 billion buys you a lot of perks. Here are Top 7 features in the world’s most expensive house:

1) Square footage. Antilla will eventually reach 27 stories into the sky and sprawl over 400,000 square feet – not counting the six-story parking garage at the tower’s base.

2) Hanging gardens. Much of the home’s exterior is dotted with vertical hanging gardens. The hydroponic plants grow in nutrient-rich water and help keep the home cool in a city where the temperature can reach the 80s (F) year round.

3) Health level. The tower comes equipped with its own gym complete with a lap pool, Jacuzzi, yoga and dance studios, changing rooms for men and women, gyms and a solarium with a juice bar.

4) The ice room. The home’s health level will eventually include an “ice room,” which will feature man-made snow. Guests will be able to cool down in the snow after a workout in one of Antilla’s many gyms.

5) The ballroom. Dual staircases with silver-covered railings will lead into an opulent ballroom. When it’s complete, 80 percent of the ceiling will be adorned with crystal chandeliers.

6) The elevators. Antilla will feature nine elevators in all. Two will be earmarked for the parking garage, three for guest quarters, two for the family residences and two for service staff.

7) The gardens. A third of the way up the tower, a four-story garden will give guests tree- and plant-lined views of downtown Mumbai. The open-air space will be supported by “W” shaped rebar that immediately makes me think of Bruce Wayne.

Read more on Antilla.

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Top five stock picks for 2011

One of the keys to successful investing is beating the herd to the next hot stock. These five stocks and sectors could be those diamonds in the rough in 2011.

One of the keys to successful investing is beating the herd to the next hot stock. Here are my top five stock picks for 2011. They might not be in the limelight yet, but they very well could be by the end of the year:

1) Tech IPOs. In my unofficial tech IPO calendar for 2011, I detail 23 major tech companies that could have large, high-profile IPOs this year. Only one of those companies (Demand Media, Inc., NYSE:DMD) has gone public so far, and it shot up 33 percent in its first day of trading. The best are yet to come, from coupon-of-the-day company Groupon, which turned down a $6 billion offer from Google, to LinkedIn, a social networking company for professionals with more than 90 million members. Keep an eye on tech IPOs throughout the year as the market seems ready to take on more risk in a sector that’s growing rapidly; particularly in China.

2) Cloud-computing. As more businesses move their web sites and applications from dedicated web servers onto distributed server platforms, several companies are poised to soak up that new revenue stream. Amazon.com, Inc. (Public, NASDAQ:AMZN) has been at the forefront of the cloud computing industry although the company’s not all that transparent on how much revenue cloud computing actually generates for them. Estimates range from $500 million in 2010 to $1 billion. UBS analysts Brian Pitz and Brian Fitzgerald predict cloud computing could pull in some $2.5 billion a year for Amazon by 2014. Two other players you might consider in the space: Cisco Systems, Inc. (Public, NASDAQ:CSCO) and dedicated web hosting company Rackspace Hosting, Inc. (NYSE:RAX). Shares in Rackspace are up more than 86 percent over the past six months.

3) Blue chip stocks. Thanks to exchange rates and a falling dollar, even investors abroad are moving into large-cap American stocks. “Australian investors have a once-in-a-generation opportunity to get as much money as they can into overseas assets, ideally blue-chip global industrial companies,” Mike Hawkins, head of private clients at Evans and Partners, tells The Australian. “When you’re talking about those high-quality global blue-chip names, the likes of Nestle and Procter and Gamble (NYSE:PG) and Kraft (NYSE:KFT) and Unilever (NYSE:UL), you’re talking about companies that are well tapped into the growth in income and demand coming from emerging markets. We see this as a bigger story than China and India’s demand for Australia’s raw materials: the growth of the emerging-market consumer is a far more powerful and enduring theme than simply the supply of raw materials to China.” As a middle class begins to develop in emerging markets, consumers will have more disposable income for food and hygiene products. American blue chips have been positioning themselves in those markets for decades, and it could finally start paying off as the falling dollar will make their goods more affordable on Chinese shelves.

4) Platinum and palladium stocks. In the precious metals community, the focus throughout 2010 was almost exclusively on gold and silver. Gold posted gains for the year of 30 percent and silver rose 80 percent. Platinum and palladium did just as well with palladium shooting up 100 percent in 2010 and platinum rising 20 percent. The gains in platinum and palladium largely came on the heels of increasing demand from China and India where the metals are used as autocatalysts to limit pollution from cars and other vehicles. Car sales surged 32 percent in China and 31 percent in India last year. GM’s President of International Operations Tim Lee expects that growth rate to slow to 10 to 15 percent in 2011 as commodity prices rise. Still, Lee points out that the sheer size of the market in China still equates to a lot of demand. “Even 10 to 15 percent growth on such a huge base makes China a vast market,” he tells AFP. For all the talk of hybrid and electric vehicles, they still only account for 3 percent of the auto market worldwide, meaning they’ll hardly dent the growing appetite for platinum and palladium. Stricter emission standards in the U.S. should also compensate for the decreased demand for platinum and palladium as more of the metals will be used to limit emissions. ETFs offer the easiest (and safest) way to get a finger in the palladium pot. Try ETFS Physical Palladium Shares (NYSE:PALL). PALL’s up 66 percent in the past six months.

5) Wealth management in emerging economies. My fifth and final pick comes from my personal portfolio: Noah Holdings Limited (NYSE:NOAH). A wealth management company, Noah serves high net worth individuals in China. After the company’s IPO in November, shares briefly spiked 30 percent and they’ve since flat-lined around the IPO price. Heavy resistance at $16 per share indicates that the downside risk is limited, and some analysts are calling for earnings growth of 35 percent in 2011 and a target price of $22 per share. The company’s numbers are off the charts with year-over-year growth in net revenue at 210 percent. It makes sense that as the ranks of China’s wealthy swell, so too will the profits at the companies that serve them. Noah Holdings should be perfectly positioned to rake in growing profits from a brand new market.

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Best India stocks to buy in 2011

Here’s a look at some of the best India stocks to buy in 2011. January’s lower stock prices could present a buying opportunity, or it could be the start of a prolonged drop in stocks as the government applies the brakes to the economy in an attempt to curb inflation.

While it often takes a backseat to economic news out of China, India’s economy has surged back to its pre-crash 2008 levels. GDP is approaching double-digit growth rates, and the country seems to have everything it needs to continue growing, according to Andrew Mickey of the Prosperity Dispatch. They’ve got all the ingredients:

  • A young population
  • A growing workforce
  • Government-controlled property rights

How can you benefit from India’s growth? By picking winning stocks in rapidly growing sectors. One of the best ways to do this is by leveraging the knowledge of fund managers whose job it is to pick winning Indian stocks. A simple way to do this is by taking a look at the top holdings of a major ETF focused on Indian securities. The India Fund, Inc. (NYSE:IFN), for example, is one of the country’s largest ETFs with a market cap of $1.5 billion.

Here’s a look at the India Fund’s Top 5 holdings and the percentage of capital they’ve allocated to each stock:

1) Infosys Technologies, Ltd. (NASDAQ:INFY), 8.57 percent. One of India’s largest and most established IT companies, Infosys employed more than 122,000 employees in 2010. Infosys’s CEO Kris Gopalakrishnan expects growth to increase rapidly this year. “The top five (IT) companies are estimated to hire 160,000 to 180,000 new employees in the next 12 months,” he said recently. If Infosys hires a fifth of those 160,000 new employees, their employment number would grow by more than 25 percent this year. You’ve got to have substantial gains in profits to support that sort of expansion.

2) Reliance Industries, Ltd. (BOM:500325), 7.67 percent. India’s largest company by market cap, Reliance Industries operates in three primary sectors: petrochemicals, refining, and oil and gas. Net profits at Reliance surged 28 percent year over year in the quarter ended December 31, 2010, largely on the strength of its refining and petrochemicals businesses. The conglomerate claims that “1 out of every 4 investors in India is a Reliance shareholder.”

3) ICICI Bank, Ltd. (NYSE:IBN), 5.69 percent. India’s second largest bank, ICICI operates more than 2,500 branches around the world. The company’s looking to expand into mobile banking as a way to reach consumers who don’t live near a branch. ICICI recently partnered with Vodafone to offer banking services at the mobile company’s 1.5 million retail outlets. That could potentially ramp up ICICI’s client base as more than 50 percent of the country’s farming households do not have access to credit.

4) Tata Motors, Ltd. (NYSE:TTM), 4.35 percent. India’s largest car company, Tata Motors is also one of the country’s most ambitious. The company launched its Tata Nano – the world’s cheapest production car – in 2008. Retailing at just $2,200, the car has struggled with image problems, missed deadlines, employee strikes, safety accusations and low sales, but its evidence for me of one thing: a company that isn’t afraid to take risks. If they can successfully re-brand the “people’s car,” Tata’s P/E should drop quickly from its current 16.39.

5) Tata Consultancy Services, Ltd. (BOM:532540), 3.39 percent. The second largest company in India by market cap (behind only corporate giant Reliance Industries, Ltd.), Tata Consultancy’s IT services have been expanding rapidly as the global economy improves. According to the most recent numbers available, Tata’s revenue grew 7 percent quarter over quarter during Q3.

Despite improving numbers in India’s overall economy, not everyone’s bullish on Indian stocks. “India’s ‘free money’ punch bowl is about to be taken away,” Mickey writes. “The expected rate increases has sent India’s stock market tumbling. India’s primary index, the Sensex, has fallen nearly 10% in less than two weeks to start 2011.”

It could be a buying opportunity, or it could be the start of a prolonged drop in stocks as the government applies the brakes in an attempt to curb inflation in India.

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