The Indian Market Broke Before China
As a follow up to the 10 Myths column, consider this chart, send in by an astute reader, of Bombay Stock Market.
Note that Indian Markets have been softening since early February, giving up over 1,000 points from their Feb peak. They finally broke trend days before the debacle hit in China.
You can draw the lines in many different ways, but they all lead to a major break the primary trend:
We can draw quite a few conclusions about this -- including something trendy about the interconnectedness of global markets.
But this is further fuel to my argument against "all of this was started by China." Something was clearly occuring in the Emerging Markets prior to the plunge in China.
Monday, March 05, 2007 | 10:28 AM | Permalink
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Comments
Too soon to call this one. Last summer's decline was sharper and deeper than this one - atleast so far. And proved to be a bear trap. The macro picture, particularly globally, is worse this time around, but I'd still hold off on any pronouncements.
Posted by: Bluzer | Mar 5, 2007 10:57:35 AM
what is the best way to short indian market from US..
short IBN?
IFN is weird.
INFY is another good indian tech short candidate.
Posted by: sam | Mar 5, 2007 11:10:27 AM
Note RSI.....under 30 for the entire index?
Looks like it weakened in early Jan.
Maybe prepare to be a buyer later as it weakens further.
Posted by: Craig | Mar 5, 2007 11:13:47 AM
A thought for the crowd. In the new globalized marketplace, perhaps a correlation that the market or index that has been the leader, is the one that brings the market as whole down?
ST
Posted by: UST | Mar 5, 2007 11:43:16 AM
Looks like some smart people started "unwinding" their positions (carry or no carry) long before the whistle was blown. more reason why it is better to follow price action and volatility indexes as I do. Anyway, you have covered this "debacle" better than anyone else Barry!
Posted by: Lauriston | Mar 5, 2007 11:44:14 AM
Barry:
Last year, you did some great posts on mystery spikes in S&P futures contracts (I think). I believe it was suggested that these unusual mystery buyers may have helped goose the market up.
Is anything like that happening today on the trading platforms you have access to?
Thanks.
Posted by: Mr. Beach | Mar 5, 2007 12:32:50 PM
Move in the Indian markets is mainly for the following 5 reasons
Value of Dollar vs. Indian Rupee
Value of Euro vs. Dollar
Over extended markets
Future exports to US and Europe
Inflation
I don’t think shorting Indian markets is a good idea at this time.
Posted by: Bakshi | Mar 5, 2007 12:39:54 PM
Barry, this is out of context with what you have written and for that I apologize in advance, but this (http://www.youtube.com/watch?v=xiHaqCFQLxA) begs to be viewed. Anyone think they are advertising to the 'mature thinking shopper'?
Posted by: Strasser | Mar 5, 2007 12:43:26 PM
Not China, not India. Freddie Mac. Now the question is whether the subprime implosion is a leading or lagging indicator
Posted by: sasso | Mar 5, 2007 1:04:23 PM
The Indian central bank raised bank reserve requirements and also the "Fed rate" short term. The redhot real estate market in Gurgaon has dried up, and prices are down some 10%. Then and only then did the BSE come down, even while foreign investment continued to flood into the stock market in India. As in the US, the basic cause is local.
Posted by: OldVet | Mar 5, 2007 4:54:44 PM
Hedge funds pulling hot money from hot markets to cover calls and losses.
Posted by: Neal | Mar 5, 2007 8:59:10 PM
Bluzer, I was the reader who sent the trend break chart to Barry. IBN puts were my play, along with LFC and BBD because the emerging markets were clearly deteriorating and India signaled a breakdown to me.
Posted by: Dan | Mar 6, 2007 6:34:09 AM
Well give yourself a cigar. Hopefully you sold yesterday.
Posted by: jj | Mar 6, 2007 8:14:52 AM
