Islamic Investment in India
India is world’s Second largest population of Muslims – 150 Million after Indonesia. Now, this means that there is a great market in India. However, Islamic religion don’t permit to invest in all the stock market investments & financial products.
Still, many Muslims have a false belief that, they can not invest their money in the stock market or in mutual funds. But this is a Myth. The reality is different. There are Shariah Compliant Investments & Financial Products which are widely available and distributed in the world of financial markets. These are the Stocks & Mutual Funds which only do Business and investments in the companies which strictly fulfill the Shariah Guidelines.
Dow Jones has Islamic index, FTSE of Britain has not only Islamic Index but also a full fledge Islamic bank, but unfortunately there is not a single Islamic Product or an Islamic benchmark in Indian investment environment.
Even more bizarre India is not covered and not included for any of their research work by any Islamic institution or bank .although India is the big market for Islamic investments,and according to me no research work of any research institution could be complete without including India. Although India has a good Islamic structure which provides opportunity of riba free investment and finance which gives us lots of benefit.
Here are the Few facts about Shariah Compliant Stocks in India -
01) While Shariah compliant investment avenues are now becoming available in most countries, India has not seen large-scale development.To gauge the scope of Islamic investment opportunities in the Indian stock market, it is imperative to examine stocks that conform to Islamic Shariah principles "Out of 6,000 BSE listed companies, approximately4,200 are Shariah compliant.”
02) The market capitalization of these stocks accounts for approximately 61% of the total market capitalization of companies listed on BSE.This figure is higher even when compared with a number of
predominantly Islamic countries such as Malaysia, Pakistan and Bahrain.
03) The growth in the market capitalization of these stocks was more impressive than that of
the non-Shariah compliant stocks.
04) The software, drugs and pharmaceuticals and automobile ancillaries sector were the
largest sectors among the Shariah compliant stocks. They constitute about 36% of
the total Shariah compliant stocks on NSE.
05) Further on examining the BSE 500 the market capitalization of the 321 Shariah compliant companies hovered between 48% and 50% of the total BSE 500 market capitalization.
Facts about Shariah Compliant Mutual Funds in India -
Another opportunity is mutual fund which is based on 100% equity. These funds are
invested in different sectors like IT, automobile telecommunication, cement and a few present in interest based financial institutes, almost 10 to 15 %. So investor has to purify that amount from the profits. And also there are many sectorial funds which invests only in a particular sector like automobile,Oil & Gas, etc
The Investor should not invest in any kind of Debt Mutual funds because according to Shariah Guidelines, you can not earn money through Interest. However, the Sector funds mainly operate in Energy, Pharma, IT, Software & Automobile Sectors are the best Investments for you.