- In India, we have seen a nice rally over the last several weeks in the equity market, and the Nifty 50 has reflected this.
- At this point, a lot of people are betting on India taking quite a bit of business away from China, especially with US and European firms.
- That may be part of what’s going on right now, but it’s also a fact that the Indian rupee has been beaten down over some time, and therefore exports are becoming cheaper.
When you look at this chart, you can see that the ₹18,000 level had been resistant, and now it should be supported if we do pullback. The ₹18,400 level has been important as resistance previously, so does make a certain amount of sense that we would see a bit of hesitation here. Furthermore, the most recent rally has been a bit steep, but it looks to me like we are going to continue to see the market tried to work off some of this froth. Having said that, a pullback does make sense, but we may just simply go sideways. Either way, I don’t have any interest in shorting the Nifty 50, as it looks like it is ready to do a major breakout.
Stocks are in Trouble
Furthermore, when you look at the overall attitude to stock indices around the world, they have shown signs of life, but it should be noted that the Nifty 50 had taken off quicker. Furthermore, as it is a leader, and may suggest that people are starting to look at the Indian economy as a potential leader once the world does recover. It’s also worth noting just how shaky the global economy is, and how India has simply ignored it. With that being the case, you want to stick with strength in a situation like we have.
The market is likely to continue to be noisy but notice how it has most certainly outperformed so many other markets that it must be paid close attention to. In fact, it sets up for a nice pair straight, perhaps buying the Nifty 50 and shorting a lesser-performing index, like one of the ones out of China that has struggled so much recently. With that being the case, I am bullish on this index, even though I believe a lot of stocks are in trouble around the world.
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