31-Jan-2006

>Oil from Grass.!!

[Update 02/02/2006]
Auhtor of AlFin commented on this article. I visted his log and really liked what he has up there.
Would encourage you to visit his logs. The topics he has written on deeply intersts me.

For more on this topic of ethanol visit.
Ethanol from Cellulose: More than anyone dreamed?
[Update ends.]

Instead of coming exclusively from corn or sugar cane as it has up to now, thanks to biotech breakthroughs, the fuel can be made out of everything from prairie switchgrass and wood chips to corn husks and other agricultural waste. This biomass-derived fuel is known as cellulosic ethanol. Whatever the source, burning ethanol instead of gasoline reduces carbon emissions by more than 80% while eliminating entirely the release of acid-rain-causing sulfur dioxide. Even the cautious Department of Energy predicts that ethanol could put a 30% dent in America's gasoline consumption by 2030...!!

read more HERE..

some points...
  • Ethanol has already transformed one major economy: In Brazil nearly three-quarters of new cars can burn either ethanol or gasoline, whichever happens to be cheaper at the pump, and the nation has weaned itself off imported oil.
  • To refine enough ethanol to replace the gas we burn (140 billion gallons a year) would require thousands of biorefineries and hundreds of billions of dollars. Yet one of capitalism's favorite visionaries is convinced that very soon filling up on weeds and cornhusks will be no more remarkable than tanking up on regular. Says Richard Branson, whose Virgin Group is starting an ethanol-inspired subsidiary called Virgin Fuels: "This is the win-win fuel of the future."
  • Sugar cane, the most energy-rich ethanol feedstock known to science. Sugar cane generates far more ethanol per acre than corn
  • Ethanol accounts for more than 40% of the fuel Brazilians use in their cars.
  • With Brazilian ethanol selling for 45% less per liter than gasoline in 2003 and 2004, flex-fuel cars caught on like iPods.
  • "I spent two years trying to convince myself that this was never going to be more than another minor alternative fuel," he says. "What I discovered was that ethanol might completely replace petroleum in this country. And a lot of countries. This was a great shock to me." Vinod Khosla.
  • Nth Power, a San Francisco energy-investment firm, estimates that $700 million of the $21 billion flowing into venture funds last year were earmarked for "clean technology" startups.
  • "In terms of key energy and environmental benefits, cornstarch ethanol comes out clearly ahead of petroleum-based fuels, and tomorrow's cellulosic-based ethanol would do even better." Energy Department.
  • Because cellulosic ethanol comes from cornstalks, grasses, tree bark--fibrous stuff that humans can't digest--it doesn't threaten the food supply at all. Cellulose is the carbohydrate that makes up the walls of plant cells. Researchers have figured out how to unlock the energy in such biomass by devising enzymes that convert cellulose into simpler sugars. Cellulose is abundant; ethanol from it is clean and can power an engine as effectively as gasoline. Plus, you don't have to reinvent cars. Ratcheting up production of cellulosic ethanol, however, is a gnarly engineering problem.
  • Genencor says its enzymes have cut the cost of making a gallon of cellulosic ethanol from $5 five years ago to 20 cents today. Now refiners have to learn how to scale up production. Canada's Iogen is the furthest along in commercialization; another hopeful is BC International, a Dedham, Mass., company that's building a cellulosic ethanol plant in Louisiana.
What to do after reading this.!!
  1. Find companies which do this research and creates patents on how to most effectively change from raw forms of cellulose to ethanol.
  2. Find companies which make the chemicals and enzymes which help in this conversion process.
  3. Find companies which makes machines to process the sugarcane or corn or whatever it takes to make ethanol.
  4. And find companies which would make ethanol using this machines and enzymes.
  5. also find companies which would grow the sugar cane and corn.
  6. Find companies which would help in transportation, storage etc etc of sugar cane.
  7. find em all...!!

30-Jan-2006

>Thinking and Pyschology

Arpits "Thinking Like a Kid" is a nice write up.

Some more similar interesting links

Tilson Irrationality Columns

Charlie munger on the psychology of human misjudgment

The Value of Predictability

Behavioral Finance

Easy Money

Physics Envy

Lunch Money Indicators Finding Integrity

Letter to Clients

After you have done reading see this again.
>Reasoning and Mind

>Key Ideas From Money Monarchs

Since the Mind cant hold too many things here I try to distil the important words and ideas from India Money Monarchs which I think are important and need follow up thinking. We would come again to see more on this.
At the end a small note from me on what come to my mind now after doing this cut-paste work..!

Rakesh Jhunjhunwala
  1. I think the momentum in the Indian economy now, is like never before. With every passing day, every Indian is getting more confident. This itself will contribute to the growth of the economy and the momentum. We are still in the structural secular bull market. And I don't think something can slow it.
  2. We are entering the first stage of the domestic inflows. The moment the investors gain, they will invest more. And I think there is humungous domestic money to come. Unimaginable. You know Indian savings in 2010 is projected to be $410 billion. If 10 per cent is to flow, it will be $40 billion.
  3. Two things worry me. First , the world economy, because I think American consumption has to come down. How it will come down, how global currencies will realign, what effect is it going to have on global demand, that's going to be very important. The American economy is going to tank in my opinion. When that happens, it will have a big effect on the sentiment towards equity. So we must be alert.
  4. Second, I think oil prices beyond a point are going to lead to higher inflation and higher interest rates.
  5. Corporate profit growth in India may slow down. But if the essential story of an improvement in quality of profits, higher consumption, and a growth rate of 8 per cent is intact, I don't think a fall from 25 per cent growth in profits to 15 per cent is really going to disturb the market. It is events outside of the market, which will shake the confidence and also affect corporate profits substantially that would worry me.
Raamdeo Agarwal
  1. This is a very strange time when all assets are at all-time high. Four or five years back if somebody had said that oil is going to $70, I mean would you touch stocks? Common sense would suggest that you should be out of stocks. But when oil hits $70, the stock market also hit an all-time high. I think, it is because of global liquidity. Like Warren Buffett has said, at any point of time, the tiniest change in the interest rates will change the value of every single form of asset in every part of the world. And I think it's coming true. The world is floating in liquidity.
  2. Equity allocation is most irrational not only in India but all over the world. The highest allocations come at the peak of the market. And the lowest allocations come at the bottom of the market.
  3. If you see the RBI data in last 10-15 years, I think financial investing constitutes about 0.2 per cent of the total GDP. When our savings rate has gone up to as high as 30 per cent, your risk-free return has come down from 15 per cent to about 5-6 per cent. When your risk-free return is 5 per cent, you equity allocation has to be the highest. But unfortunately, allocation is still low. So, it is very clear that people understand only price. Fortunately for three consecutive years we have had a fantastic rise, first year 85 per cent, then 16 per cent, and now close to 40 per cent. Now people are realizing that bank deposits at 5-6 per cent are not worthwhile. Let's look at the Indian stock market.I think this is not the best time to buy into the stock market. I'm not saying that we are beyond the interval or anything like that. But what I am saying is that if allocations increase, it could really blow up.
Sanjoy Bhattacharya:
  1. If you look at Indian Mkt from the context of the next decade or the next 15 years, there is absolutely no doubt about how markets will move. And I'm proud to be an Indian today. This is a very exciting country to be in right now.
  2. A hell of a lot of growth that we are going to see in the next two or three years is not going to be profitable growth, but unprofitable growth.
Bharat Shah:
  1. In the context of the life of a country or our own investing life, one year is not so critical. I think there is huge opportunity for compounding, whether this year will be it on not, I don't know, but I certainly do believe that for next few years that these are great money making opportunities. There are some outstanding opportunities, in every bull market and there are ideas -- ideas which are still attractive. And in every bear market there are some overvalued businesses. I don't see that changing now.
  2. From 1997-98 which was roughly the time when good companies decided they had to ramp up, cut costs, become efficient,go global, improve manpower quality, raise the asset efficiency, improve working capital efficiency and all of that. Many good companies have done that, and used capital very wisely. They didn't really inject any money in into the business, and turnover grew modestly but the profits grew much faster.
  3. From around 2003 onwards we are seing companies putting more money into the business, they are raising the scale and that's the phase that we are seeing a little bit more of capital intensity creeping into the overall corporate environment.
  4. I think in these 2-3 years, the easy pickings of the earlier years have gone and that was a phase where x percentage growth in topline produced x plus y percentage growth in operating profits and disproportionately larger x+y+z kind of effect at a pretax profit level. So companies did extremely well on the bottom line front. I think last couple of years, we are seeing a mild correlation of x percentage growth in topline leading to maybe a modest x+y percentage growth in profits. Going forward, I think there is every possibility for many of the businesses that x percentage growth in topline will mean x minus y in the bottom line. And I think it is important to be aware of that. You don't want to be touching the ones who are embarking on capex, but you want to hunt for the businesses receiving capex. So rather than hunting for Tiscos of the world who want grow their capacity 10 time in next 15 years, I would probably like to look at businesses which will benefit from that.
R Sukumar
  1. I think the market is being driven by the fact that India was totally undiscovered and there is money coming in and I think this is the tip of the iceberg. It's going to be much much bigger and when you really look at the demographics and the implication it has on the savings rate and the type of money that people can put into the market over the next 20 or 30 years, the amount can be mind-boggling. The money that is coming into the equity market is obviously increasing.
  2. My rough estimate is that there is about $1 trillion with the households currently. So every one percentage point shift could mean about $10 billion of flows into the markets. And if you assume it's going to be a 10 per centage point shift, we are looking at $100 billion. And FIIs in the last 11 years haven't put in $100 billion. So, I think from a pure demand perspective, it's going to be pretty mind-boggling over a period of time.
  3. In the long term, innovation will ensure that oil price is not going to impact the economy too badly. But from short to medium perspective, innovation is not going to help.
  4. We are in the business where we are saying don't come to the market unless you're looking at 5 and 10 years. So to speak about 2006 I think is plain unethical. But if you look at 2006, I don't see the foreign inflows increasing dramatically.
  5. From a domestic point of view there is scope to increase and we are seeing some signs of increasing. So I think both are positive.
  6. I think oil is definitely a short to medium term worry.
  7. The worry is clearly that the supply pipeline is building faster and there is a lot of incentive for a lot of promoters who don't really create value to raise capital at this point of time. Whether it happens or not I think is the issue.
Madhu Kela
  1. I am very optimistic on the real estate sector.
  2. One, when I look at the overall market cap of real estate companies in relation to what the overall market cap of the India is, it's disproportionately low.
  3. Second, you know as Rakesh said that crooks become honest when they become wealthy. And the markets have proven many a times that too much emphasis on that honest management may help you talk good but it doesn't help you generate good returns. So you have to look at managements which can deliver. And look at the size of the economy and look at the size ofreal estate development which has happened. Look at -- you know Hong Kong is a $200 billion economy, Singapore is $125 billion economy -- when you go into these countries, look at the kind of real estate development which has happened. And look at -- we are going to be $1 trillion economy in the next couple of years and the state of real estate development in our country. And that is what I meant when I said we look at external opportunity. The opportunity looks staggering. Now, our job is to find that hungry promoter and buy it at the right value. And sit tight.
  4. I think the pace of infrastructure development in our country is what is really worrying me a lot. The pace of the whole infrastructure unbundling has to happen much much faster than what we have seen.
  5. The companies which are benefiting out a domestic economy expansion and are benefiting out of domestic consumption will continue to do well. The other thing which I have been quite positive over last 2-3 years and continue to remain positive on the outsourcing opportunities minus IT. Pharmaceuticals, auto ancillaries, there are lot of sectors which are opening up -- and most ideal placed companies are wherever you have 60-70 per cent turnover coming from the domestic side of the business and 30-40 per cent turnover coming from the export side of the business. And the size of the export opportunity looks very large.
  6. I think you have a look at the sum total of investing in your favor. You can't look at oil in isolation. Because if you looked at oil in isolation, you would have been worried even at $50 and would have been sitting on cash. The reality is markets have moved up 50 per cent and oil has also moved up by $20. So as long as the sum total of investing remains in your favor, oil in isolation will not be a big worr
Prashant Jain
  1. When we look at risks, we look at two things. One is event risks which impact the sentiment of equities globally or locally. And second is events or factors which will impact the earnings growth or the economic growth of country.
  2. We don't see many risks which will reduce or impact the economic growth in this country on a sustainable basis. I mean to put things in perspective if you go back 20 years oil used to sell for may be Rs 10 to a litre. Today it is Rs 45 to a litre. So clearly it has not impacted economic growth.
  3. I think oil impacts us two ways. One is it increases inflation world over, but it does not put our companies at a comparative disadvantage to others. Because cost of production is the same. And second is it reduces consumer surplus. Which again I don't think is very relevant in the Indian context because such a high savings rate and such a high growth in income.
  4. That is why oil even if it spikes, it may impact the sentimental equities, but I don't think it will have a lasting impact on corporate profits or economic growth over even a 2-3 year period. So, I don't see too many events which will reduce the economic growth potential in this country. But sentiment could suffer. I mean if I think if something happens in Iran or Iraq or generally sentiment towards equities worldwide turns bearish. I think today we are far more globally integrated, we see huge amount of capital inflows. So I think if the sentiment towards equities deteriorates, we will suffer. But I don't see any concern as far as economic growth is concerned.
  5. What has happened in the last two or three years is that PEs were very low and because of deleveraging, improving cost efficiencies, falling cost of borrowings, the profit growth has been disproportionate. And as Indian stock markets have been discovered by the locals and the PEs are now quite reasonable.
  6. Number one, I think going forward we will see profit growth is slowing down, And number two, the profit growth will not be uniform all across sectors. But regarding stock prices moving by 20-30 per cent in a month or in a matter of weeks, I think it is always like that. You may hold a stock for three years but in 10 per cent of the days, it will give you bulk of the returns. So I am not particularly worried about Siemens going up by x percent on a particular day. But one thing what I am sensing is in the market is that the premium for quality has certainly shrunk. And as an investor or a manager, what I'm trying to do at least is to focus more on the quality. And I think, big money is over.

My Take:
  1. We had a high-tide mkt for last 3-4 years. Anything and everything has gone up.
  2. In the latest quarterly or semi annual reports which come up we see lower profits, some companies even show -ve growth in sales.
  3. Many companies especially in commodity area are talking of huge expansions and capex.
  4. FII inflows have made new records.
  5. As Proff. Sanjay said, a lot of growth we see in future is not going to be profitable growth.
  6. What to do now?
    1. Turn defensive.
    2. Listen less to great growth charming stories.
    3. Look at companies which can sustain their margins while they grow.
    4. Find companies which dont take a ton of new loans to finance growth.
    5. Find companies which have generated above average return on Total Enterprise Value.
    6. Again in case we see a down cycle which last for say 2 years, come back to growth stories and listen to them when no one would trust them.
    7. For now use 2-3 layers of Protective Rubber..!!

>Round Table With Indian Money Monarchs and Reading List

Seven stock market stalwarts debate the prospects for Indian stocks in the annual round-table organised by Capitalideasonline.com.

In this cathedral to capitalism, in this hallowed hall, the soul of the Indian stock market, if you will, when this group of witnesses last assembled in 2003, the Sensex was at 3000 -- it has now tripled; the number of Indian companies with a $1 billion market cap has crossed 75 and India's market cap is over $500 billion.

http://www.business-standard.com/bsonline/storypage.php?&autono=213262

and dont miss..

The Ultimate Reading List

27-Jan-2006

>4 year Equity Cycle



One more reason to remain cautious in year 2006.
Almost unfailingly the 4 year cycle has worked in US mkts.
We might also catch the infection after the current euphoria diminishes.

Time to remain invested only in exceptional companies and to give a hard review to each stock in ones portfolio.

25-Jan-2006

>A Small Discussion on Scanning Companies

To address the question of how efficient a firm is in using its capital.

We have to define a few things.
1. What do we call as Return?
2. What do we call as Capital?
3. What is the re-investment required for sustain.

Some concerns
1. The earnings per share of a firm reflect not just the earnings from operations of a firm but all other income as well. Thus, a firm with substantial holdings of cash and marketable securities may generate enough income on these investments to push up earnings.
2. In addition, earnings per share and equity multiples are affected by how much debt a firm has and what its interest expenses are.

Owner Earnings = Net income + Depreciation & Amortization – Capital Expenditures

Enterprise Value = Market Value of Equity + Market Value of Debt - Cash & Marketable Securities

I like this ratio
Owner Earnings / Enterprise Value

Why not include Interest paid in numerator while we including
Debt in the deniminator.
1. Penalise companies which have a lot of
Debt.
2. This is also in recognition of the "Safe Scala
bility" of the company. If a company needs a lot of debt to sustain, imagine how much more fuel it would need to grow.
3. This is a safe measure..!!

I use Enterprise Value to gauge the 'total' capital in the hands of management. Just looking at equity or assets is not my preference. Since when you try to scan for stocks, very frequently during "good times" companies with high
Debt will shows excellent ROE while in truth they could be destroying value.

Com
bine this scan with Low PE and you have a very good cluster of companies to start of your deeper analysis.
Again the E in PE is the modified Owner Earning as shown a
bove.

Other things which I look at apart from the a
bove two are:
1. High Operating Profit Margin. (direct show of competitive strength, try to gauge if it can remain this way)
2. Return on Total Assets.
3. Moderate to High Sales growth.
4. Growth without taking on tons of
Debt.
5. Non-Cyclical. (get into Cyclicals if you think the Commodity
business is at the lows of the cycle & the company is more competitive then the rest in the pack)
6. Triggers which would lead to dramatic changes.
7. Insider Accumulation.
8. Low PE.

To read more on this follow this link.
>ROIC + Earnings Yield? Magic Formula for Value Investing?

Need to know places where you can Scan Indian companies Follow this link
>Fundamental Information & Scanners of Indian Stocks

Have a view? Or you think this is un-optimal do share your views. Share links which you find helps in scanning and understanding more. Cheers..!!


24-Jan-2006

>Reasoning and Mind

In a great book “Just One Thing” by John Mauldin, there is a brilliant piece by James Montier, “Psychology Matters” which contains two tables on how the mind reasons.

System One: Experientia (X-system/ Reflexive/Intuitive)

Holistic
Affective (what feels good)
Associative – judgments based on similarity and temporal contiguity
Rapid parallel processing
Concrete images
Slower to change
Crudely differentiated – broad generalization
Crudely integrated – context-specific processing
Experienced passively and preconsciously
Automatic and effortless
Self-evidently valid: “Experiencing is believing,” or perhaps wishing is believing

Neural Correlates of this System
Amygdala
Basal ganglia
Lateral temporal cortex

===========================================

System Two: Rational (C-system/ Reflective)

Analytic
Logical
Deductive
Slow, serial processing
Abstract images
Changes with speed of thought
More highly differentiated
More high integrated – cross-context processing
Experienced actively and consciously
Controlled and effortful
Requires justification via logic and evidence

Neural Correlates of this System
Anterior cingulated cortex
Prefrontal cortex
Medial temporal lobe

==========================================

Now why this post here?
I want you to figure why this post is here.

Note:
This post if copied from CIO. I post things I like to re-read many times and refer in future.
I think this is one of the imporant post made on this log.

21-Jan-2006

>Fundamental Information & Scanners of Indian Stocks

Lot of people find it difficult to find information for companies they choose to invest.
While in US mkts there is a flood of stock scanners, screens and what not we do have a scarcity.

Here are some links you can use to make some priliminary scans.

AMFI for MF Info
To know what mutual funds are doing and How much new money they are rasising visit this.
http://amfiindia.com/amfimonthly.html

Kotak Company Data
http://www.contentlinks.asiancerc.com/kotaknew/fundamental/Corporate.asp
Enter the company name and hit search and follow the links.
There are some similar pages to this.. I find this as most comprehensive.
You can see past 5 years annual results.
Last 4 quarterly and semi-annual results.
MF's holding this scrip.
Directors and Chairmans Speech.
Company history.
Raw Material needed, cost and same for finished goods.. and more..


EquityMaster Screener
http://www.equitymaster.com/research-it/company-info/search/internal.asp
This is a cool screener. Try your hands on it and you may get expertise soon.
You can create a lot of conditions and scans.

MoneyControl
To know what MF's are doing to some stocks in past 6 months
http://news.moneycontrol.com/mf/user_scheme/mfholddetail_sec.php?sc_did=IT
The link is for Infosys. U can use the search edit at end of page and find for your stocks.


ICICI-Direct Screens
The main page for re-searching on this site is
http://www.icicidirect.com/research/research.asp
ICIC doesnot offers a great scanner. U can search for only one parameter at a time.

Some predefined scans which are useful are:

Cheapest Stocks of Large Growing Companies
Stocks of companies with mark cap>1000 Cr. that has a profit of 20% ,P/E <20>

Poor Man's Stocks
Stocks in Sensex with highest dividend yield,Lowest Price-earnings ratio and lowest Price.

Medium and Large Cap Stocks with high dividend yield but low P/E ratios.


Distressed Stocks
Those Companies with mark cap > 100 Cr. and stock prices near 52 week low.

Top Profitable Companies
Those companies with highest growth % in profit over the previous year

For Custom Search use this link
http://www.icicidirect.com/research/customsearch.asp?icicicode=type%20symbol


If you know more sites/pages which has similar useful stuff do leave a comment.

Here are some new additions which I never used earlier.
This is from Toughiee and Nitya

Geojit
For information on particular companies
http://www.geojit.com/profiles/list.asp
Put in the company name and search.

To see sector wise peer comparision (which is quite good and unique)
http://www.geojit.com/score/scorelist.asp
This two are also good.

Update: 27-01-2006

ILFS
http://www.investsmartindia.com/iil_new/research/Index.aspx
Enter the company name and search.
In the result you get you would see two more links.
Compare this Company
Peer group comparision


13-Jan-2006

>Indian Real Estate. A look in future.

=>India allowed real-estate funds in April 2004 and Smart money may have found a new home in India's underdeveloped property market.

=>PricewaterhouseCoopers LLP estimates that as much as $8 billion of private equity will flow into Indian real estate funds over the next 18 to 30 months.

=>Software and call-center companies have underpinned demand for commercial property in India.

=>The entire country has a little more than 70-million-square feet of A-grade office space, less than Shanghai and Beijing put together.

=>Technology services account for as much as 85 percent of India's office space demand.

=>An undersupplied market means that the net yield on office property in India is 11 percent. That yield is among the highest in Asia.

=>Add to it a 20-40 % price appreciation in the past 15 months, and office space in Mumbai, New Delhi and Bangalore starts to look like a very attractive asset class.

=>Supply is expanding, though demand is rising at a faster pace.

=>By 2010, technology-related work that will get ``off- shored'' from developed countries to India may jump more than fourfold to $60 billion.

=>It's reasonable to expect that in the next year or two, the government will allow overseas retailers such as Wal-Mart Stores Inc. and Carrefour SA to enter the Indian market. As hypermarkets and shopping malls jostle for a slice of the country's total non-residential property stock, office space will get scarcer and dearer.

=>The Indian property market may get a further boost when the regulator allows real estate investment trusts, or REITs.

=>A committee set up by the Securities and Exchange Board of India, or Sebi, has recommended that REITs should be allowed to be set up as mutual funds. While that suggestion is still under consideration, Sebi has allowed high net-worth individuals -- both local and foreign -- to participate in the market through the private equity route.

=>The HDFC India Real Estate Fund, which in July 2005 gave local investors their first chance to own multiple properties with a single investment, was open to individuals with at least 50 million rupees ($1.1 million) to spare. The seven-year, close-ended fund, jointly offered by Housing Development Finance Corp., India's No. 1 mortgage financier, and State Bank of India, the country's largest commercial lender, will allocate as much as 45 percent of its $230 million kitty to office space for technology companies, which will require 66 million square feet in the next five years.

=> Overseas money, too, has begun trickling in. In June 2005, GE Commercial Finance Real Estate, a unit of General Electric Co., announced a $63 million investment in a private-equity fund sponsored by Singapore-based commercial and industrial developer, Ascendas Pte. The fund will, over a period of seven years, acquire and develop office space worth $500 million for computer software and back-office companies across India. General Electric's participation in the deal should inspire confidence among other investors. GE probably understands India's potential in back-office services -- and its effect on property markets -- better than most. Under former Chairman Jack Welch, the company pioneered outsourcing in India back in 1997. The unit, with 17,000 employees, was valued at $800 million in November 2004, when GE announced that it would sell most of the business to private-equity investors.

=>Ascendas, too, has experience in the Indian property market. It's the leading partner in the consortium that was formed in 1994 to build the 1.9-million-square foot International Tech Park in Bangalore, where tenants include Lucent Technologies Inc., International Business Machines Corp. and SAP AG.

=>India has understood that big-ticket foreign investment in real estate will follow internationally established developers. In February last year, the government significantly relaxed investment norms for overseas developers.

=>``Foreign investment,'' says Magazine of CB Richard Ellis, ``will change the face of the Indian real estate industry.''

=>Retail participation will be the icing on the cake, though for REITs to work in India, stamp duties, which vary from one state to another, must be aligned and brought down significantly to 1 percent or so from 5 percent to 15 percent at present.

=>For investors who can afford to provide a larger chunk of capital and leave it locked in for seven years, the field is already wide open.

=>Investors are flocking to them because these could be a more rewarding vehicle to bet on India's computer software and back- office businesses than owning pricey stocks. Morgan Stanley Capital International's India information technology index has quadrupled in a little more than 2 1/2 years.