India is a global business hub that consistently ranks as one of the world's fastest-growing economies. It also has been one of the world's best-performing stock markets in 2012.
While, Indian equities aren't as cheap as they were in late 2011 there's room for upside. Here are three India gems that we recommend buying on any pullbacks: HDFC Bank
) and Tata Motors
The Indian economy is oriented toward domestic demand, buttressed by steadily rising incomes and a relatively healthy banking system.
The population is growing rapidly, and the exploding Indian middle class is quickly becoming brand-conscious and purchasing more modern amenities.
India also is home to growing ranks of technology-savvy, collaboration- minded young professionals, combining high levels of education and an excellent command of English. Indian business leaders are developing a reputation as globally focused, pragmatic and conscientious.
Per capita income has almost doubled since 2006 and is expected to reach $2,000 sometime in the next three years. As a result, services now represent about 59 percent of GDP and employ around 25 percent of the population.
Given that exports remain on the back burner, any prolonged failure to reignite domestic demand could have serious consequences for India's short- and medium-term future.
HDFC Bank is one of India's biggest private banks, with 2,200 branches and 15 million retail clients. It's among the top two or three players in all consumer loan segments except mortgages.
Although HDFC Bank's stock trades at a premium to its peers, the financial institution's strong domestic position and its consistent delivery of solid operating results warrant a higher valuation.
HDFC Bank is a big beneficiary of demographics: India is a nation of young people with rising incomes who are driving consistent domestic demand. The company has substantial room to grow in a financial services market that remains remarkably underpenetrated.
Most of HDFC Bank's new branches are located outside metropolitan regions that are ripe for service by the banking industry.
HDFC Bank and others have turned a regulatory mandate into opportunity, because it has allowed them to attract more accounts from smaller towns. About 62 percent of the firm's branches are now outside India's nine biggest cities.
HDFC Bank is one of Asia's best- run financial institutions, and management has a strong track record of producing steady growth without incurring excessive risk.