This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

India at Critical Inflection Point

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

By David Gillie

NEW YORK ( ETF Digest) -- India, Asia's third largest economy and the world's most populous democracy, is at a critical inflection point as it ends the fiscal year in March.

The government announced an anticipated growth rate next year of 6.9%, down from 8.4% the previous fiscal year. Much of the weakening economy has been related to the struggles of it European trading partners. India's growth rate had been explosive prior to the 2008 crash. However, the Indian stock market had a 25% slump in 2011 even with an 8% growth rate. Much of the pressure on the Indian economy was excessive inflation. The government took strong measures to not only curb inflation but to draw outside investment. A further sign of positive monetary policy is an anticipated rise in interest rates.

WisdomTree India Earnings (EPI) was the first all India ETF.



Although EPI hasn't regained all of its losses from 2011, performance over the past week and month show its track of recovery.

Holdings in EPI are weighted 23% in financial services--common for international ETFs. It is also well balanced with basic materials, consumer cyclicals, energy and tech--each comprising 12-18% of the weightings of this ETF. With 2.8 Million shares traded daily on average, EPI is one of the most heavily traded single country ETFs.

EPI had a spectacular breakout of the extended downward channel in January. The breakout was validated by a pause at the end of the month and then a continued gain on higher volume.

With this kind of price action, EPI hit every trader's radar screen. It is now in extreme overbought conditions and against a dual resistance of previous highs and the 200 day moving average. The Relative Strength Index is unsustainable at the current level over 79. We also see the Money Flow Index coming down off its overbought highs. The +/- Directional Index at the bottom of the chart shows an extreme divergence that would be highly unlikely to continue. Additionally, the AXD above 40 usually signals trend exhaustion. The late January pause was encouraging that it amounted to minor profit taking on a brief stall at the early signs of being overbought. At the current conditions, we're likely to see another profit taking in EPI, perhaps stronger than the previous situation.

Timing an entry is important at this level. Ideally, we'd like to see a pullback to the previous stall price around $19.40 to establish a new support level and build a base to push through the 200 day moving average. Even a pullback to the previous high around $18, which would also coincide with support of the 50 day moving average, would keep EPI in positive strength territory.

For investors looking for an entry into EPI, prudent action might be entering a partial position at the $19.40 level. Should it rise from there, you could add to complete the position. Should the price pull back to the $18 support, you could fill out you position there and lower your cost averaging.

Disclosure: At the time of writing, I do not own any position in EPI.

Follow my intraday market commentary and various other observances on Facebook and 
This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
EPI $20.76 0.00%
AAPL $112.12 0.00%
FB $93.24 0.00%
GOOG $643.61 0.00%
TSLA $220.69 0.00%


Chart of I:DJI
DOW 17,084.49 +33.74 0.20%
S&P 500 2,014.89 +15.91 0.80%
NASDAQ 4,830.47 +19.6820 0.41%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs