We may look back at today’s price action in India and say this was the day that initiated the pullback we have been calling far.
With an almost 3% pullback in the index intraday off all-time highs there is some price action to support technically overbought conditions.
Ultimately India (EPI, quote) still closed up +0.10% on the day but an 82 relative strength indicator (RSI), a measure of how overbought or sold a security is; a reading of 70 or over is considered correction territory.
With some fresh currency weakness may just be what weighs down the very good sentiment and supportive macro.
Today India printed solid current account data (1.7% VS 4.7%) as a lower trade gap supported improvement in the widely watched measure of economic balance for India.
The currency weakness was driven by talk of intervention in the currency after a run of strength that has the finance Ministry a little concerned.
We are targeting a move back to 23000 (-8% move) on the Sensex before evaluating new longs.