India’s markets are finally attracting the attention of big international investing firms.
During most of this year, the ETFs that track the markets in India have suffered quite a lot.
WORST PERFOMER SO FAR
So far this year, India ETFs are the worst performers amongst other major BRIC ETPs. Their equities have been plagued by a weak currency (Indian rupee) discouraging international investors from putting their capital into Asia’s third-largest economy.
However, it seems that the tide is turning for this country. It was revealed that through a deal with the World Bank, India will launch its first offshore rupee bond effort, worth $1 billion. This was followed by reports that said India was in talks with big American banks such as J.P.Morgan and Citigroup in order to gain entry into these banks’ emerging markets bond indices.
NEW STRATEGY
This strategy from the Indian government to liberalize its debt markets in an effort to attract more foreign investors has served as a catalyst to turn their ETFs around.
Investors are putting cash back to work with India ETFs. In September the WisdomTree India Earnings ETF (EPI) and the iShares MSCI India ETF (INDA) had inflows north of $100 million.
This injection of capital has helped the Indian rupee rally against the U.S. dollar close to 15% in just a few months.
PROFESSIONALS WENT IN EARLY
On the Vantage Point chart of the BSE Sensex we used the Williams Professional Sentiment Index, which gave a clear entry signal just before the big move. As we can see on the chart, the index rose over 10% in 30 trading days.
The price of the BSE Sensex is approaching all time high levels, which have only been hit twice before. The first time was in January 2008 and the second was in November 2010.
Many of us are looking forward to see a continuation in the current upswing backed up by this recent move on behalf of the Indian central bank (Reserve Bank of India), which has thrown a lot of excitement back into this emerging market.
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