The Indian stock market is having a great year. We observed exactly one year ago that India would do extremely well this year, and our call was spot-on as the Nifty 50 Index rose some 25% in 2016.
However, 2017 is setting up to become an even more exciting year, according to our analysis.
The Indian stock market in 2017 is likely to rise much more than 25%, so it should not come as a surprise that it is our favorite stock market index after the Nasdaq.
India is not a widely followed market in the Western investor community. In the Asia region it is a popular market.
The Economic Times of India recently confirmed our bullish outlook as it wrote that Indian stocks will go higher in 2017.
How high can Indian stocks climb in 2017? The answer to that question is that we could see a rally of 40%, and that is based on the current chart pattern. The ten year chart of the Nifty 50 Index shows a bullish trend channel, drawn with the red lines on below chart. The support line was tested early 2016, and we expect that the resistance line will get tested in 2017 (ultimately 2018). That resistance line will be touching the 12,000 point level after summer 2017.
Are we saying that the Indian stock market will climb to 12,000 points in 2017? Yes, that is our most bullish forecast, and we would say there is a 50% probability for that scenario to play out. Our bullish expectation is based on the very strong real GDP growth in India of approximately 7%, combined with an exceptionally strong chart pattern and a bullish forecast in general for emerging markets in 2017.
Western investors can go long an ETF like INDA which is a publicly traded instrument with a simple entry.