JPMorgan urges investors to ignore Indian stockmarket gloom

Mr Pulling said the Indian market had lost 24.7 per cent in US dollar terms for the year to 31 May 2008, partly because of investor sentiment and the rupee losing ground.

He said the region was a large importer of energy, which meant its trade deficit had widened as energy costs had risen.

Mr Pulling added, however, that India is currently in "an excellent earnings environment" and is the second-strongest growing economy after China.

"Its GDP is currently around 8.8 per cent, and future economic growth will be sustained at between 7.5 and 9 per cent over the longer term," he said. “We expect to see the exchange rate stabilise, and we are confident India has the reserves to ensure this is not a long-term issue.”

Mr Pulling said there were three main growth areas within the region – infrastructure, investment and urbanisation – and that the portfolio had been positioned to exploit these areas, with top sector holdings in energy, financials, industrials and information technology.

Gavin Haynes, managing director at IFA Whitechurch Securities, said: “The Indian market has had a tough time recently because India has not had natural resources. So it has suffered because of commodity and energy prices, and its performance has been hit hard.”

Mr Haynes added that the market was expensive six months ago, but is now one of the more "attractively priced" emerging markets.

"Over the long term, its sheer size and potential for growth in terms of demographics and the rise in consumerism cannot be ignored, although investors must accept some short-term volatility," he said. “The JPMorgan fund is one of the most established funds focusing on India, and one which we have bought for our discretionary portfolios.”