From Taki Tsaklanos: The stock market of India was a top performer throughout 2016. But what’s the India stock market outlook for 2017?
As usual, we start with a short overview of sentiment. In general, the Indian stock market outlook does not get a lot of attention, which is a typical bullish phenomenon. As said before, bull markets which go unnoticed have the most potential.
An analyst recently wrote that the Indian stock market outlook for 2017 is bearish. That is very strange to us, as the price levels mentioned by the analyst, e.g. 8600 points in the Nifty 50 Index, the key stock market index in India, do not seem to carry much value on our charts. We find important price levels at 8100 points and 7500 points, based on our chart analysis visualized below.
India’s stock market outlook still bullish for 2017
Basic chart reading of the Indian stock market reveals a long term pattern with very strong support at 7500 points. Worst case, the index will fall to that level, which still validates a bull market scenario. The other important price level is 8100 because that is the 90 week moving average (the only technical indicator which we monitor). As seen on the chart, that moving average has mostly acted as support or resistance in the last 5 years.
Although we do not focus too much on retracement levels, we see that the 50% retracement of the 2016 bull run coincides with 8000 points. We consider this more of secondary importance though, but it clearly shows how important the current 8000 to 8100 level is.
Our outlook for the stock market in India in 2017 is that it will start the year in a bearish way. We expect a quick turnaround into a bull market. The line in the sand is 7500 points, and we expect this level to hold. If not, for whatever reason, then market conditions would become concerning.
The iShares MSCI India ETF (BATS:INDA) was unchanged in Wednesday morning trading at $26.68 per share. Year-to-date, the largest India-focused ETF has fallen 2.98%.
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