After collapsing a brutal 40% last year,WisdomTree India
Earnings Fund (
), the largest ETF tracking the South Asian country, has rallied
17% year to date.
That surpasses the 12% gain by
MSCI Emerging Markets Index (
) and 13.6% by
iSharesMSCI EAFE Index
), which tracks developed foreign markets.
Part of the robust returns came from its currency's strength
against the dollar.WisdomTree Dreyfus Indian Rupee ETF (
) has appreciated 5% year to date.
managing partner and chief investment officer of MA Managed
Futures Fund, says the government has taken bold steps to support
the rupee by attracting foreign investments and cutting the
Bullish Chart Action
Trading patterns show India ETFs are in a solid uptrend with
strong institutional support. EPI gapped above its 200-day moving
average to confirm a new uptrend Sept. 14, after the Federal
Reserve announced a third round of quantitative easing, which
drove investors into high-risk assets.
EPI has a rather weak IBD Relative Strength Rating of 38,
which means its price action has lagged 62% of the market in the
past year. But its Accumulation-Distribution Rating has improved
from a C+ to A. That shows institutions are heavily buying
There are four other passages to India for U.S. ETF
IPath MSCI India Index ETN (
), up 19% year to date.
PowerShares India Portfolio (PIN), up 11% year to date.
Market Vectors India Small Cap Index ETF (SCIF), up 17% year
to date, is the only one in the bunch that hasn't broken above
its 200-day moving average.
EG Shares India Consumer ETF (INCO) has rallied the most year
to date, 26%, and is the only one that's reached a 52-week high.
It sports the highest RS Rating in the group, 72, and an A-
Russ Koesterich, global chief investment strategist at
iShares, explained the improvements he's seen in the South Asian
country in a blog Thursday,
"4 Reasons Why We're Upgrading India."
To summarize Koesterich:
1. Indian stocks are trading at low valuations. EPI trades at
9.25 times prospective earnings vs. 11.5 for emerging markets on
average. It has a price to cash flow of 3 vs. 6 for EMs.
2. India's gross domestic product grew a better-than-expected
5.5% year over year in the second quarter. Its GDP is projected
to grow 6.4% annually.
3. India's planning commission has targeted growth of 8.2%
from 2012 to 2017, surpassing the 7.9% target hit the previous
4. Investors are underinvested in India relative to other
emerging markets, which should boost prices if investor
But Koesterich overall is "neutral" on India and "still some
way from turning bullish" because of high inflation and a weak
rupee that will limit future interest-rate cuts. The country has
fiscal deficits and erratic policymakers.
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