Market Overview

Goose Is Cooked For India ETFs, At Least In The Near-Term

One day does not make a trend, but at this point, we're talking about much more than one day when it comes the slack performance of India-specific ETFs. Darlings in 2010 have become redheaded stepchildren in 2011 as India has succumbed to inflation concerns perhaps more so than any other market save for Indonesia.

Six rate hikes by the Reserve Bank of India in 2010 did little to dampen food inflation and chances are it could take several more rate hikes this year to make a real dent in this problem. Hey, you start approaching 10 rate hikes with little result and you've got problems.

That's a theoretical scenario and it must be noted that India's long-term economic growth outlook is among the most impressive in the world. Emphasis on long-term. In the near-term, India is a sell and has been for at least a month now. Today's trading is very telling. Look at a heat map of emerging markets ETFs and exclude the Market Vectors Indonesia ETF (NYSE: IDX) because it split today. Everything is in the green except for the India ETFs.

WisdomTree India Earnings ETF (NYSE: EPI)? Down. iPath MSCI India Index ETN (NYSE: INP)? Down. PowerShares India ETF (NYSE: PIN)? Down. We could go on, but you get the point.

Admittedly, the intraday losses aren't bad, but no loss is good. The charts on most India-specific long ETFs are broken right now giving astute investors two opportunities. First, those with longer-term time horizons can start doing some shopping with small positions in EPI or an equivalent. Second, the bold can opt to profit from further declines (and they're probably coming) with the Direxion Daily India Bear 2X Shares (NYSE: INDZ). That's the best near-term India trade.

Posted-In: Long Ideas News Short Ideas Specialty ETFs Emerging Market ETFs Intraday Update Trading Ideas ETFs

 

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