Investors around the world have the option to invest in funds and stock indexes that take into account how companies measure up against everything from the values of the Quran to social responsibility and environmental norms. Now in India a small but influential community of Jain securities traders is calling for a new stock index that matches their beliefs in non-violence and the sanctity of life… The idea of investing in companies that are kinder to nature and humans might appeal to non-Jains as well…
Jainism preaches respect for all living creatures. Devout Jains avoid meat, fish, eggs and even vegetables such as onions and garlic that are uprooted when harvested. Many Jains won’t eat potatoes for fear insects and worms may be killed in the process of gathering them. Some Jain priests even cover their mouths to avoid inhaling insects. While Jains account for just one half of one per cent of India’s massive population of 1.2 billion people, they make up a disproportionately high percentage of India’s stock and
diamond traders, partly because their beliefs make it difficult to work on other professions.
Now that small investors are pouring money into Indian stocks, propelling the Sensex to new highs, some of the leaders of the Jain stock-trading community want to make their mark by creating an index that would make it easier for observant Jains to invest. The index would be made up exclusively of companies that don’t depend on violence to make money, its backers say. The exact components of any potential Jain index would have to be debated, but brokers say it won’t include companies that deal with meat, leather, pesticides or weapons. “I think it’s a good idea and there will be a niche audience for this kind of product,” said
Motilal Oswal, a Jain who is chairman of Motilal Oswal Financial Services Ltd., a Mumbai-based brokerage firm.
While Jains account for just one half of one per cent of India’s massive population of 1.2 billion people, they make up a disproportionately high percentage of India’s stock and diamond traders, partly because their beliefs make it difficult to work on other professions.
Mr. Oswal’s company already tries not to promote the shares of liquor, tobacco and leather companies. It also avoids pushing shares of hotel chains because hotels usually have restaurants that serve meat. “I will support the idea of such an index,” because it will make Jains more comfortable with investing, said D.R. Mehta, former chairman of the Securities and Exchange Board of India and a visiting professor at the International School for Jain Studies in Delhi.
The stock market isn’t the only market where the Jain community has some influence. Some Indian branches of Domino’s Pizza and Subway also offer Jain friendly options. While it is still unclear which shares should be included and which avoided, brokers said any Jain index would likely exclude stocks such as shoe maker Bata India Ltd., poultry company Venky’s (India) Ltd., Insecticides (India) Ltd. and even Jubilant FoodWorks Ltd., which operates the Domino’s Pizza chain in India. Jainism also bans smoking and drinking of alcohol so ITC Ltd., India’s biggest cigarette maker, and United Spirits Ltd., the country’s largest spirits producer, would also be out. Among the industries that may be allowed in the index are telecommunications, outsourcing, banking and jewelry, traders said. That would mean phone companies such as Bharti Airtel Ltd., banks such as State Bank of India and maybe software companies including Tata Consultancy Services Ltd. could be part of the index.
If a Jain index is launched, it will not be the first faith-based index in India. The country already has Shariah indexes that are compliant with some Islamic beliefs. Islamic law doesn’t permit Muslims to invest in companies that profit from charging interest or the sale of goods that are deemed sinful like alcohol and tobacco.
Jains often have trouble investing their money as they can’t park their cash in standard mutual funds, worried that they will be supporting companies that profit from violence or other things their religion forbids. The idea of investing in companies that are kinder to nature and humans might appeal to non-Jains as well.
“Retail investors are gradually coming back to the stock market after a gap of five years,” said Vivek Mahajan, head of research at Aditya Birla Money, a Mumbai-based brokerage firm. “In case you do have a Jain index, there is no reason why some amount of (that) money will not come into this kind of investment product.” If launched, it will not be the first faith-based index in India. The country already has Shariah indexes that are compliant with some Islamic beliefs. Islamic law doesn’t permit Muslims to invest in companies that profit from charging interest or the sale of goods that are deemed sinful like alcohol and tobacco. Alka Banerjee, managing director of equity indices product management at S&P Dow Jones Indices, which manages index products for the BSE Ltd. stock exchange said the company is still investigating whether there would be enough demand to warrant creating a Jain index.