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India 50 by TrendFollower

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For many years I have been investing in JP Morgan Indian Investment Trust and Fidelity India Focus Fund. My returns over the past 15 years or so in these investments are phenomenal. I have been adding to them on a monthly basis over this time period to take advantage of 'Pound Cost Averaging' and I made further lump sum investments during the financial crisis and the subsequent recovery period. 

However around Christmas time (2018) I began looking at the India 50 from a trading perspective. It just recently made a new high.

Basic Fundamental Analysis:

Now Narendra Modi has just won his second election by a far larger majority than his first election. I visit India regularly and some of the projects are very exciting. The demographics are positive for India as they have a large population under 30. If Narendra Modi can ensure that the educated youth have a job which suits their skills set then India has great potential. Another thing he must ensure is that capital is invested in infrastructure. The quality of the roads is a must. I recently went on the Baroda Express Highway and it is as good as any freeway in the US or motorway in the UK if not better so India are improving in this area. 

GIFT City in Gandhinagar is exceptional. I recently had a meeting there and they took me on a tour around the site. It has mind-blowing potential. I include the website below.

http://www.giftgujarat.in

https://en.wikipedia.org/wiki/Gujarat_International_Finance_Tec-City

One must remember that India has a very large population of around 1.4 billion where as the UK has a population of around 66 million. It is being reported that if the current growth for India and UK continues in terms of GDP then India will overtake the UK around 2022 - 2023 to become the 4th largest economy in the world. If this does happen then investing in India and trading India must seriously be considered. 

I include the 'daily' chart for India 50 below for you to see how it has performed over the past couple of years. 

1342591498_India50_20190610_07_14.png.9a785abfff43c243ee58d82a9e2bfadb.png

In my personal judgement, India, over the next five years has the potential under Narendra Modi to experience serious positive growth. It is a market that really excites me. There are some excellent investment funds and investment trusts out there for India but also those who trade indices may want to seriously look India 50 which IG offers. I do accept that margin requirements are a lot higher than the US, UK and EU indices so this will put a lot of people off unless they are professional client for IG which then makes it a lot cheaper to trade. 

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India will require more foreign direct investment. This is a given. With Brexit, the UK's eyes may be on India to negotiate trading deals with them. New roads are being built. This I have seen with my own eyes. It will take time though. Toilet facilities are being provided and of a better quality too throughout India. Again this is a mammoth project. One of the biggest things I have seen evidence of is 'Electrification' and Narendra Modi for me has delivered here. 

A lot of people point out negatives in relation to Narendra Modi. The reality is he has no credible opposition or has any substance. He is India's best bet for long term growth. It is being reported that in around 10 years it could be the third largest economy in the world just being the US and China. What an achieve this could be. If this does happen (I do not know that it will for sure) then just think of the stock market performance India could see over the next 10 years!

GDP growth is around the 7% area which is very impressive. I believe inflation is below 5% but that is a tad too high for me. 

India Is Now Investing More in Solar Than Coal

https://www.ecowatch.com/india-solar-power-investments-2638682086.html

India is currently the fifth largest economy in the world and it is growing faster than any other of the G20 economies. I am a big fan of investing in 'Emerging Markets' and 'Frontier Markets'.

For me, India is a gem in the Emerging Market Universe. 

As India grows I think we will see more and more companies going public which will lead to a boom in equities and the humongous middle class in India begin shifting from Cash, Bonds (Fixed Deposit accounts) and Gold and into Equities. When this happens the Indian Stock Market is going to be a lot higher. 

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India over the next five years is my tip from an investment perspective when it comes to 'Emerging Market' investing.

China is busy in a trade war and dispute with the US. The US market has already shown significant growth since Trump's election and prior. I think India is going to benefit from further investment and interest from all around the world. This will drive up the Indian stock market so India equity investment for me remains very attractive. 

I want to share the following article with you below:

India becomes investment darling for sovereign wealth and pension funds

https://uk.reuters.com/article/uk-india-investment-swf/india-becomes-investment-darling-for-sovereign-wealth-and-pension-funds-idUKKCN1TM0JK

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hi well india 50 is down rite now by 2 to 300 points from were it should be mainly bcoz of budget how u see it when it is going to correct itself and any technical analysis for this indice that u prefer....

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@MYK1,

Indian Equity Markets are merely correcting. I invest in JP Morgan Indian Investment Trust have done for many years now. I just use the sharp corrections as opportunities to add to my investment. I invest every month into it and again have done this for many years.

I visit India on a regular basis and the growth I am seeing their is just simply phenomenal. The BBC, ITV, Channel 4 and Sky will not always show the goods parts of India (it is a vast country in size) and you tend to see video clips of poverty and slums when it comes to countries like India. 

Narendra Modi has won the recent election and has the largest mandate in recent times to really make some progressive and positive changes in India to drive growth and GDP. I am confident he will give it a real good go. 

These corrections are pretty normal when you look at the Indian stock market over the past few years. It all depends on whether you are an investor or trader when it comes to India. In terms of trading India 50 it all depends on what timeframe you are looking at and what your trading strategy is. Your question is a bit too vague. 

The one thing I need to add here is that I have a 'positive bias' when it comes to investing in India. I openly admit that though I try to see both the positives and negatives of investing in India. Also I do not have a crystal ball and do not practice magic so I cannot say when it will correct itself or what it will do next minute or tomorrow. 

I would be extremely surprised if it went below 10600's. India's growth story is still in tact and the narrative is as strong as ever. It is whether India can deliver the growth of 8% or more that is required now. 

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Yes for sure it is a growing economy with a lot of opportunities in it but my question was about recent price action of india 50 two fundamentals really affected it budget on last friday and the second one US increasing tax on india exports dumping down from 11900 to 11500 zone... well lets se wat it does....

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@MYK1,

I do not see India stock markets tumbling or crashing down too far. Yes it may be a deep correction but with a longer term view I see the Indian stock market making new highs as it attracts more investors around the world who think they are getting better value than before this correction. 

Price action will tell us if my assumption will be correct or not. I do not disagree with your post. The simple answer is that I cannot know for sure that it was those reasons why caused the price to decline as other major equities across the world have declined so it could have been a case of Risk Off rather than Risk On. Even if you are correct then these will merely be short term movements.

The key psychological price point that I do not want to see India 50 hit is below 10000. That would be bad news if that were to happen. It must defend that price level at all costs. 

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India 50 is showing a large and sharp correction. It seems to be liking the 11000 level but as I said in my previous post it must defend the 10000 level. That is the critical price point for me. If it does then I see this as an excellent buying opportunity and a very good price level to start thinking about adding to your positions if you already have invested in India.  

One must put this downward move into context. When developed markets begin any sort of decline in equities, the emerging markets will fall greater and the frontier markets will fall even further. India has fallen greater than the US and UK. This is what we have witnessed. Yes India 50 could go down further towards 100000 level but if it does then it could present a fantastic opportunity to invest more capital in a country whose stock market I see higher than current levels in five to ten years time.

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India 50 is still staying above the 11000 area. Of course there is the wider market correction occurring in major worldwide indices. You then have the US-China trade war and Brexit along with issues in Iran. To add to this which is more significant for India is the India-Pakistan tensions over Kashmir. This makes the Indian markets very volatile at the moment. It is that dose of volatility that can create and present opportunities. 

India for me has more compelling arguments for a long term bull market than it does against it. There is political risk which will be one of the biggest risks India faces but if it can manage this effectively then opportunities await.

For now I would wait and see if 10000 price level is going to be revisited. 

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    • Currency risk which way? If you're betting £1 a point then there isn't really any currency risk between that trade and your base currency (i.e. the currency you will be settling the trade in). Your profit and lose will tick in GBP so GBPCAD isn't an issue.  There would only be a currency risk (when referenced against your base currency of account) if you're trading the CFD which is denominated in USD or CAD currency - depending on the listing. Only then would a GBPCAD / cable hedge be required. 
    • exactly that - the order type is only important for how you buy the shares in relation to it's price point. If you're looking to 'buy and hold' as a strategy then you can use use either order type. 
    • Guest Phil
      An interesting infographic https://www.ft.com/content/44bd6a8e-83a5-11e9-9935-ad75bb96c849   
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