Islamic India, a Euro 20 million fund launched in Germany in January this year, is set to make its debut in the Indian equity market in a couple of weeks and expects a five-fold growth in its corpus within a year.
"We hope to scale up our investments from Euro 20 million to Euro 100 million within a span of one year," said Zafar Sareshwala, managing director and CEO of Ahmedabad-based Parsoli group. The fund will invest in companies listed on the Parsoli Islamic Equity Index (PIE).
"The performance of PIE has been in tandem with the Bombay Stock Exchange (BSE) benchmark index Sensex," claimed Sareshwala.
The index comprises actively traded stocks that are easily accessible to investors. Of the 41 companies in the index, 31 are from the Sensex and S&P CNX Nifty and 10 from the BSE 500.
"The index does not include companies, which are related to tobacco, alcohol, hotels, cinema and banking, insurance and financial services.
Certain inherent financial ratios set up by the Shari'ah scholars are then applied to the remaining companies in order to remove companies with unacceptable levels of debt or impure interest income," said Sareshwala.
The companies are screened every quarter to ensure their compatibility with the Shari'ah law. Based on quarterly screening, the companies are included or excluded from the index.
Though the Parsoli group has the first-mover advantage with the launch of its India lslamic Fund, other players are not far behind. Kotak Bank, a private sector bank, has announced the launch of its international Islamic fund to help international investors buy Indian stocks complying with the Shari'ah law. UTI AMC is also reportedly looking at setting up a similar fund.
The increasing interest in Islamic investment has led to a slew of Islamic indices being launched, with MSCI Barra's global family of Islamic Indices being the most recent addition.
A research conducted by the Parsoli group in 100 cities in the country showed that wealth of the Muslim population is comparable to that of the non-Muslim communities.
However, only 2-3 per cent of the households surveyed are investing into stock markets. The group already had about 5,000 accounts for stock market investments, added Sareshwala.
