One of the markets we expect to outperform in 2017 is the Indian stock market, represented by the Nifty 50 index. It was one of our favorites for 2016, and it delivered nice returns, although the correction in the fall erased part of the gains.
We recommended to stay long, and only sell if the Nifty 50 would go below 7500 which it did not do.
The Indian stock market currently trades at 8200 points. The first weeks of 2017 will be very important for India and its stock market, as its chart setup looks great at this point. After a correction in the fall of last year, the decline came to a halt lately. If the index goes higher from here, it would be extremely bullish as we would have a higher low, more than 5 pct above secular support (purple rising line on the chart). In other words, the rising trend would be validated, and it would, without any doubt, lead to a new attempt to break through all-time highs.
If the rising trend line will not break (read: the 7700 level is broken to the downside), we expect 2017 to be a very profitable year for global investors that are long the Indian stock market.
The question is how to invest in the Indian stock market, and does it make sense for American or European investors to invest in a stock market that far away? We believe it does, for two important reasons:
- Diversification. A diversified portfolio reduces risk (though diversified holdings should always be chosen diligently to avoid dilution).
- Upside potential. The Indian stock market can move sharply higher if it starts trending. In 2014, for instance, it rose 50 pct in one year.
The way to ride a bullish trend in India is either trough a ETF like INDA or selecting individual stocks. We will provide sufficient coverage of this stock market in 2017, and, if it breaks out, we will provide a selection of individual stocks for subscribers (we are currently preparing our short list).