Wednesday, September 18, 2013

Recent Indian Bounce Looks Purely Technical

Over the last few weeks, the Indian market has rallied sharply.  However, it appears to be a technical bounce for two reasons.

1.) Volume is low, and
2.) Prices have not broken through upside resistance (at least not yet).

Also consider that recent news about Indian inflation ties the central banks hands on policy:

Indian inflation unexpectedly accelerated to a six-month high in August as the rupee’s slide stoked import costs, adding pressure on central bank Governor Raghuram Rajan to sustain efforts to support the currency.
The wholesale-price index rose 6.1 percent from a year earlier, compared with July’s 5.79 percent climb, the Commerce Ministry said in New Delhi today. The median estimate of 25 analysts in a Bloomberg News survey was for a 5.7 percent gain.