Special Report: Indian stocks up 35% since December

Many analysts believe the Euro zone crisis is a major cause of BRIC countries lagging. If so, then Brazil, Russia, India and China seem to be finding their own ways out of the doldrums, and they’re back on traders’ radars. We’re spending the week looking at what’s changed in the BRICs’ technicals.

Earlier this week, we saw how Brazil and China were showing similar trading patterns. Today we’ll find out what’s different about India.

The WisdomTree India Earnings Fund (EPIquote) is an easy way to gain exposure to India.  The EPI ETF seeks to track the price and yield performance, before fees and expenses, of the WisdomTree India Earnings Index. The fund employs a “passive management” – or indexing – investment approach.

EPI has just recently started to outperform its peers. In absolute and relative terms India’s market bottomed in the middle of December and has not looked back since, tearing up the chart with an incredible gain of 35%.

What’s exciting is that both the ETF and the index price have moved above their downward 15 month trendlines. This trend change is clearly for the better.

As with any strong rally eventually the stock needs to rest and consolidate before continuing. Momentum indicators are suggesting the market is getting tired and we should see a shakeout of the traders taking profit at current prices. We see this because trading is now pushing up against a very large congestion zone (trading range) that was set in place in the first half of last year.

If the bulls can keep price correction small and close to the broken trendline, the price is likely to resume its climb. India is on a different path to Brazil and China, but it’s a path that still promises to be profitable.

Tomorrow

We conclude our tour of the BRICs with the titan of energy production: Russia