Faith-Based Indices Less Hit in Recent Market Meltdown

April 2, 2008

Author: Shailesh Menon

Source: The Economic Times

Blessings of Allah be on him who is mild and gentle in his business transactions... The trader who plies his trade cleanly will rise in the Hereafter” — says the Holy Koran.

The God above seems to have upheld the Prophet’s word, as faith-based investors — more particularly Islamic investors who follow the ideals of Shariah investments — have not really burnt their fingers in the recent market meltdown. While broader indices have fallen in the range of 20-25%, Indian faith-based indices have only dipped 12-17% over the past three months.

Faith-based indices include stocks that strictly support an ideology. Though there are not many faith-based investment opportunities in India, investments in Shariah-compliant stocks are fast catching up. Shariah, the canonical law of Muslims, has strictures regarding finance and commercial activities permitted for believers.