Emerging markets stocks and exchange traded funds are on fire to start 2017. One of the obvious sources of that strength is India, Asia’s third-largest economy. The fine start to 2017 comes after Indian stocks and ETFs sagged to end 2016, wilting in the wake of the surprising U.S. election results.
The iShares MSCI India ETF (BATS: INDA), PowerShares India Portfolio (NYSEArca: PIN) and the WisdomTree India Earnings ETF (NYSE: EPI) have all notched double-digit year-to-date gains with EPI leading the way a gain of 11.7% to start 2017.
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.
“After nearly 2 months in 2017 the Nifty 50 Index (leading Indian stock market index) is about to challenge the magic 9000 points level. This is a very important price point because it coincides with all-time highs in India. A break above this price point will lead Indian stocks much higher in 2017 and 2018,” reports ETF Daily News.
New Delhi projects India’s economy could expand between 6.75% and 7.5% in 2017-18 as the government shifts tactics on its economy.
India’s market suffered a blow at the end of 2016 after Prime Minister Narendra Modi yanked about 86% of all cash from the economy to fight so-called black money to fight back against the huge shadow economy.
While the economy may experience a short-term setback from the move, the results of demonetization could usher in long-term benefits to the economy.
“Interestingly, this is the third attempt to break out. Investors typically consider that three attempts are required to clear secular resistance levels. InvestingHaven’s expectations are that the 9,000 points level will be cleared given the very strong chart setup and bullish momentum that the price chart manifests,” according to ETF Daily News.
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.
For more information on Indian markets, visit our India category.