BSE Sensex unaffected by selloff in US markets

Price at time of writing – 22,343.

In a quick follow up to last week’s introductory note on India’s BSE Sensex, today’s zoomed-in chart highlights just how little the index has been affected by the two-day selloff in US share markets. 

Despite a small fall at the end of week, the BSE Sensex is currently up around 0.6% since last Monday’s update. My buy recommendation is firmly intact.

The chart also highlights classic Gann-theory analysis. On three occasions since 2008 the index has hit my band of resistance defined as 20,400-20,835. The third, most recent occasion was in October 2013 after the Sensex traded in a largely sideways manner. This type of action is an essential precursor to any fresh and potent breakout. In late February, the index broke cleanly above 20,835 and has not looked back since.

Indian share market strength is also consistent with a better trend I detect on other emerging markets. Last week I also highlighted another regional market in Thailand. The parameters I set then for buying the index were also triggered mid-week.

Exposure to the Indian share market is easy. The iShares MSCI India ETF (a quoted Exchange Traded Fund) is my preferred route, but a CFD on the India 50 cash (otherwise known as the Nifty Fifty) is also a well correlated product which can be dealt in both US and Australian dollars, reducing currency risk to the rupee.  

Recommendation: stay long. Trading target 24,000. Ultimately, a target as high as 38,256 can be expected in years ahead. Stop-losses can be activated on momentum below 20,400.

BSE Sensex chart

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