Guinness Flight Global Asset Management is launching the Madras Indian Equity Fund, an open-end unit trust focusing on small- and medium-cap Southern Indian stocks.
The Dublin-listed fund is geared to raise money from institutional and retail clients in Europe and the Far East, said Ashwani Mathur, who oversees the country fund. London-based Guinness Flight officials hope to raise $10 million to $15 million during the Oct. 16-Nov. 10 launch period.
Mr. Mathur said the Indian stock market is "extremely undervalued." Blue-chip stock prices have plunged nearly 30% since the market's peak a year ago, reducing price/earnings ratios to the 13 or 14 level from levels between 22 and 25.
Foreign investors had poured lots of capital into Indian stocks, only to cut off the flow after Mexico's crisis last year.
Indian government officials also pursued a tight monetary policy that placed pressure on domestic corporations' ability to borrow money.