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India ETFs
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About India ETFs |
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India ETFs Overview and forecast
India has one of the biggest, most volatile, stock markets in the world, and the India ETFs reflect both a lot of trader interest and quite unusual Rates of Change (ROC). The India ETFs show a long bumpy ride through the 2008 crash, but they've also charged back from their lows at great speed and good trading volumes.
Interestingly, the India ETFs seem to trade in very close parallels in terms of performance and price moves. That includes a very solid trading interest, quite high intensity trading, as the norm. The close parallels indicate a market sentiment in the practical sense for traders. In day trading, the India ETFs do fluctuate relative to each other, but they tend to perform very much in the same bandwidths. They're like Bollinger bands in their price variables.
Despite some apparent resemblances, Bollywood and the Indian stock market are not the same thing. This is a highly reactive market, which has been criticized for being too ready to get overheated. There's some justification for that criticism. The Indian stock market was severely affected by the 2008 crash. In India, the effects were highly destructive, mainly because this is very much a trader's market. Investors are advised to keep that fact in mind at all times when dealing with the India ETFs.
Short term (6 months)
The fact is that the India ETFs are very good traders, and profitable, provided you're trading with a clear upside. As you can see from our chart, http://www.etftips.com/INP staged a very good, $20 a unit price rise in the June quarter of 2009. That's not an atypical performance, and it does reflect the inherent interest of the market in these ETFs.
The broad trading pattern for the peak period of the crash was that trading volumes reduced noticeably, and returned when an obvious upward movement was obviously beginning. Several major spikes in volumes occurred during the upturn, probably indicating the return of major traders into the market. This is an informed market, and the short term upside is trader dictated. It takes some learning to appreciate how the prices move in shorter terms.
Medium term (2 years)
While the trading in these ETFs is always pretty healthy, the risk of overheating is very real. Although not as dramatic as the Indian stock market, a month can see both major nosedives and steep rises in the India ETFs. The time frames are a reference to the likely scenarios across them. There aren't many static points, not going up or down, with the India ETFs.
That might be great for traders, but it's also guaranteed to get on the nerves of investors. There is an inherent upside in the India ETFs, because of their market. Traders will create upsides. As with many ETFs, the rebound off lows is pretty good, but in this case it's a matter of knowing where the lows are. That's not necessarily easy in a market able to drop 65% in a few months.
Long term (5 years)
The long term upside for the India ETFs is built in to natural growth, increased trading volumes, and the economics of a global recovery. India is locked in to the global economy, and it's been a mixed blessing. The increased cashflow is largely responsible for the highly reactive trading environment. Despite the fact of an improving corporate sector and greatly improved earnings, the market tends to distort in major moves.
The long term, like the medium and short terms, will probably be a combination of trading events, with the underlying theme a background of economic conditions. It's obvious from the dramatic upsurge that the market for the India ETFs can sustain significant price moves. It is actually possible that the India ETFs can return to solid positive returns, which is a pretty good view for the upside of any class of ETFs. Even so, investors should be wary of the proven ability of this market to produce long sustained big drops in value.
Qualifiers to projections
In all fairness, the Indian economy and the investment market it has created are relatively new. The intensity of trading may result in a much more disciplined market, less open to drastic corrections, and the absurd levels of pre crash index rises may become more realistic as the market develops. The 2008 crash created quite atypical conditions, to which the Indian market's nature was particularly vulnerable.
That said, investors and traders in the India ETFs should adopt clear investment strategies to minimize risk. A 65% drop would be highly destructive to any investment portfolio, and the India ETFs have shown a clear ability to produce smaller moves of 10% at a time, rapidly, in succession. This is one of the few cases where it's possible to profile the best adapted traders in this market: An experienced day trader, with a healthy suspicious streak, would be the perfect investor in the India ETFs.
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Last Updated on: 2010-01-14 02:03:40 |
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Quotes are updated automatically. Quotes are delayed. Etftips.com has not
reviewed, and in no way endorses the validity the data. Etftips.com shall not be
liable for any actions taken in thereon. All information provided "as is" for
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agree not to redistribute the information found herein. ETF Values can go up as
well as down.
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