In 2001 Goldman Sachs’ Jim O’Neill coined the acronym BRIC for the four emerging economies of Brazil, Russia, India and China. He argued that the BRIC countries were poised for a takeoff, uncoupled from the performance of the developed countries.

The uncoupling is over — as the developed economies have faltered lately, so have the BRICs.

Now, with weak demand from the developed economies, slow domestic growth and spiraling inflation, many are writing off the BRICs. The contrarian BRIC is India. Its inflation has leveled off. Domestic demand continues to grow. And its dependence on foreign demand has lessened. That’s great news for investors in India.

An example: For investors in Alchemy Long Term, a small equity fund being managed out of Mumbai, 2012 has been exceptionally good.

Alchemy’s Offshore Equity Fund, to date, is up about 34 percent, compared to the 22 percent growth recorded by the benchmark BSE500 index. And it has beaten the Dow Jones Industrial Average, which is up to 13245 from 12218 on December 31, 2011.

“Alchemy is betting on management teams that continue to grow their companies. They see this tough environment as an opportunity to build, not just stay put,” says Hiren Ved. “They see this environment more as an opportunity, than a constraint,” says Hiren Ved, chief investment officer of Alchemy Investment Management, which manages Alchemy Long Term and a number of other India-specific funds. And they all are focusing on tapping domestic demand.

Alchemy is an investor in Bajaj Finance, a company that continues to grow revenues providing loans for the purchase of consumer and home appliances and two-wheelers such as scooters (cars and vans are too expensive). Another company in its portfolio is Titan Industries, an operator of stores that sell watches and jewelry. “They continue to roll out new stores aggressively and are well positioned to increase market share when the economy really rebounds,” says Ved.

Infrastructure companies that contribute to sustainable long-term growth — power generation companies, construction equipment, infrastructure financing — are also on Alchemy’s list of preferred investments. For sustainable growth and for consumer spending to continue growing, India needs to move forward aggressively with developing the country’s infrastructure. But India also needs to be cautious, says Ved, making sure that infrastructure development is in keeping with the needs and capabilities of its complex — and politically fragile — regional government structure.