Yesterday I noted that I would not be a buyer of China based on various indicators. However, in looking at its neighbor to the south, I would be a buyer of India at this juncture. The technical backdrop is solid as the index has seen steady gains (yet not parabolic) while the economy is expected to show better growth prospects going forward. While it would be naive for me to believe India is immune to the US problems, it appears the connection has waned a bit over the years arguing that if India can growth around 8-9%, then the downside is around 6% in my opinion on a US recession which argues for support. Further, with more global influence comes more opportunities and if the Indian economy grows, this should increase the the Rupiah globally - stronger currency combined with high rates leads to inflows of investment.
In terms of the chart, the upside looks to be about 20k at this point as shown. The index is not overbought and the trend measure I use to look at acceleration/deceleration is breaking out to the upside after consolidating. Such normally leads to impulsive moves to the upside - in other words, we could see the index move to the top of the range in short order and then consolidate again. A breakout to the upside would change the steady rise dynamic and lead to a rise in volatility. I am unsure if local authorities will be receptive to such given their history.
So overall, I am bullish on India via the solid economic position and the solid chart.
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