Indian stocks and country-specific exchange traded funds have been selling off, with the benchmark gauge at a five-week low, potentially opening a buying opportunity for value investors.
The S&P BSE Sensex rose 1.6% Tuesday, the most in over two weeks, after falling 0.9% on Monday to its lowest level since November 21 in response to Prime Minister Narendra Modi’s hints at hiking taxes on income earned from share trading, Bloomberg reports.
Meanwhile, the iShares MSCI India ETF (BATS: INDA) rose 0.4%, PowerShares India Portfolio (NYSEArca: PIN) gained 0.3% and WisdomTree India Earnings ETF (NYSE: EPI) was flat on Tuesday. Over the past three months, INDA declined 12.0% PIN dropped 9.0% and EPI fell 9.2%.
“The market looked a bit oversold and investors used the opportunity to value-pick stocks,” Jitendra Panda, chief executive officer at Peerless Securities Ltd., told Bloomberg. “But we can’t say that the worst is behind us. Market will remain volatile till we get more clarity on foreign investors’ plan for the emerging-markets. ”
While Indian stocks may look more attractive after the sell-off, many market watchers are still wary of emerging market exposure, especially with a strengthening U.S. dollar and still uncertain policies under a Trump administration.
Indian shares had declined in eight of the previous nine sessions on concerns over outflows from emerging markets to the U.S. and ongoing issues over India’s move to ban higher-value currency notes, Reuters reports.
Further supporting the bounce back on Tuesday and allaying fears stemmed from Prime Minister Modi’s comments, Finance Minster Arun Jaitley stated there were no plans to raise long-term capital gains.
There is a “bit of bounce back based on confidence-building measures by the finance minister,” Alok Ranjan, head of research at Way2Wealth Securities, told Reuters.
More aggressive investors who are confident about a bounce back may even look to a leveraged bullish play on Indian markets. The Direxion Daily India Bull 3X Shares (NYSEArca: INDL), which takes the 3x or 300% daily performance of Indian stocks, was up 0.9% Tuesday.
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