India has roughly the same population size as China however the steadiness with which they have grown in terms of economic development is world's apart from their counterparts who have set the new benchmark with the speed and adaptability of progression in less than 25 years. However there remains pockets of opportunity for India to be had as the Sleeping Giant battles to regain the height of the growth percentages it once amounted pre and post Financial Crisis.
Probably the most recognisable brand to foreigners listed on the National Stock Exchange of India and featured in the Nifty 50 is the Tata Company that lists a number of different enterprises such as Tata Motors, Tata Steel, Tata Mahindra, Tata Power and Tata Consultancy Services. One of the objectives when listing a company is to gain international reputation with foreign investors which I think Tata has done well. With that said more needs to be done with other bigger companies listed to expose themselves to foreign investors in an effort to raise more capital and diversify the sources of funding, a lesson that can be learned from the likes of Tata Co.
Besides Tata there is also the likes of Bharti Airtel, a global mobile telecommunication that has amassed a large base of subscribers locally in India as well as across the Asian continent. The need for communication has grown rapidly throughout emerging markets with India being no exception.
Let's get straight into the charts:
Monthly
An exceptional bullish charts that looks close to touching the support line of the long term uptrend, the index has followed the wider trend experienced globally of retracing back some of the mammoth gains accumulated in yesteryear. The prominent feature that separates this chart from the rest I've done analysis on is the fact that price has exceeded the highs made in 2008, 2010 and 2013 that formed solid resistance. Just this fact alone has the potential to open the upside to new all time highs being recorded with the latest occurring in early 2015 not so long ago.
An ascending triangle formed over a protracted period of time with the breakout happening quite some time ago meaning that the current trend has a degree of continuity in it if it hasn't been broken up yet. Both the lateral and uptrend support may provide the confluence needed to get the bulls fired up to surmount a decent effort that could see the previous highs of 9000 being surpassed with an ultimate target 10 400. The stochastic has been skirting along the oversold region for some time now with signs that its looking ready to bolt upwards which could be the cue for the bulls to enter the fray.
The RSI has trended downwards for a number of months and appears to be breaking the downtrend signalling the end of the downward momentum, added evidence that the buyers are coming to the party to take things higher.
Daily
On the daily we see a downtrend firmly in place since October 2015 perhaps even longer if you consider the lower highs towards the left of the chart. The price lies underneath the 50 SMA with the recent retest of 7600 being critical for taking things higher. As you can see that hasn't happened with the stochastic currently pointing down.
My thinking here is we could begin to see the formation of the right shoulder of an inverse Head & Shoulder pattern forming. This plays into my previous bullish analysis of the monthly chart by lining up the price movements that could occur before we see the next up move. If we were to see a pullback on the chart I would speculate that it would be limited to the lows of the left shoulder which isn't that far from where we are presently.
We would then need to see a rally back to the top of 7600 that is suffice to breakthrough overhead resistance and onwards towards the next resistance level which I think would be the 50 SMA. Overall it feels as if the chart is building into something explosive but we can't be for certain yet so its best to monitor it on an ongoing basis.
That wraps up another interesting edition of Travelling Technicals, I hopefully get to hear from you soon as I really appreciate all the feedback I've gotten so far. If you would like to contribute or comment on the blog please contact me on cadetrader@gmail.com
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