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Sunday, November 14, 2010

Comparison of BSE Sensex and European Index Chart Patterns – FII inflows to continue?

The BSE Sensex index chart pattern has relied on substantial FII inflows to sustain its bull rally of the past 20 months. Will the FII inflows continue? A comparison with some of the 1 year chart patterns of the European indices (in blue) clearly show that the Sensex chart (in green) has outperformed all of them – thanks to the stronger growth of the Indian economy.

Austria ATX Index Chart

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The Austria ATX index chart has barely gained during the past 12 months, but actually outperformed the Sensex through Dec ‘09. From May ‘10 onwards, the Sensex chart gradually pulled away.

France CAC 40 Index Chart

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The CAC 40 index chart has made no progress in the past 12 months, though it had managed to track the Sensex till the middle of April ‘10. It was a no-contest thereafter.

Germany DAX Index Chart

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The DAX index chart pattern has gained almost 20% – the best among the European indices. It outperformed the Sensex till July ‘10. The tables were turned from Aug ‘10 as the Sensex broke out above its long trading range.

Netherlands AEX General Index Chart

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The AEX General index chart has gained about 9% in the past year, and stayed ahead of the Sensex till the middle of Jun ‘10. Once the Sensex took the lead, there was no looking back.

Oslo All Share Index Chart

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The Oslo All Share index chart has been one of the better performers, and gained a creditable 15% during the last 12 months. It fell behind the Sensex from Jul ‘10 onwards

Stockholm General Index Chart

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The Stockholm General index chart also performed well to gain 15%, and only fell behind the Sensex from Sep ‘10.

Swiss Market Index Chart

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The Swiss Market index chart is bringing up the rear – along with the CAC 40 and the Austria ATX index charts – by barely gaining 2% during the past 12 months. It outperformed the Sensex during Feb ‘10 to Apr ‘10. It was a different story from Jun ‘10 onwards.

UK FTSE 100 Index Chart

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The FTSE 100 index chart managed to touch the double figure mark in percentage gain during the past year, but has underperformed the BSE Sensex index since Jun ‘10.

Bottomline? The underperformances of the European index charts in comparison with the BSE Sensex index are likely to continue for a while longer. Till the European economies start showing strong signs of improvement, or the Indian economy starts slowing down drastically, the FIIs inflows are unlikely to reverse direction.

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