Comparing Nifty with Global Indices over the past year

The Indian stock market performed splendidly during the past year. Nifty gained nearly 35% when it hit its peak earlier this month. The subsequent correction pared off some of the gains. Yet Nifty clocked more than 25% gains for the year – which is quite substantial for an index dominated by large-cap stocks.

To put the gains into perspective, Nifty’s one year closing chart (in blue) has been compared with 10 global index charts (in green). With the notable exception of Argentina’s MERVAL index, which handsomely outperformed Nifty during the year, the other 9 indices trailed Nifty’s performance by large margins.

Small investors are flocking back to the Indian market – as can be seen from large inflows into domestic mutual funds – getting attracted by Nifty’s gains during the past year. It is unlikely that there will be a repeat performance from Nifty during 2015-16 fiscal year. However, a 15% gain looks possible – and will still beat bank fixed deposit and debt fund returns.

Australia All Ordinaries (in green) vs. NIFTY

Australia’s stock index dipped into negative zone during Oct ‘14 and Dec ‘14, but managed to eke out about 10% gains during the year.

Austria ATX (in green) vs. NIFTY

Austria’s ATX index gave negative returns through most of the year – managing to close flat for the year.

DAX Germany (in green) vs. NIFTY

Germany’s DAX index oscillated between positive and negative zones till the beginning of 2015. The index rallied spectacularly during the past 3 months, managing to catch up with Nifty’s gains by the end of the year.

France CAC40 (in green) vs. NIFTY

France’s CAC40 index rallied strongly from Jan ‘15 and managed to close the year with 15% gains after spending several months in negative zone.

MERVAL Argentina (in green) vs. NIFTY

Argentina’s MERVAL index took investors on a roller coaster ride – gaining a huge 100% by end Sep ‘14, then giving up most of the gains by Dec ‘14, only to rally strongly to end the year with 75% gains – handsomely outperforming Nifty.

Canada TSX (in green) vs. NIFTY

After briefly outperforming Nifty in early May ‘14, Canada’s TSX index ended the year with a meagre 5% gain.

S&P 500 (in green) vs. NIFTY

USA’s SPX index had a very good year gaining 12% in a country where interest rate is 0. But it underperformed Nifty almost throughout the year.

Taiwan TSEC (in green) vs. NIFTY

Taiwan is an Asian manufacturing tiger – specially in electronics and computers. But its TSEC index barely gave 10% returns to investors.

Korea KOSPI (in green) vs. NIFTY

Korea’s KOSPI index hugely underperformed the Nifty, just managing to close in positive zone.

Malaysia KLCI (in green) vs. NIFTY

Malaysia’s KLCI index remained in negative zone despite a late rally – underperforming Nifty by a large margin from May ‘14 onwards.

Comparative charts of world stock indices at 52 week highs

In yesterday’s post on the Nifty chart, the concluding comments were: “Expect some more correction, but remember that many global stock indices are at or near life-time or 52 week highs. That is a sign of a global bull market.”

Given below are the 1 yr closing charts of 10 global stock indices (in blue) that are at or near their 52 week highs. The 1 yr closing chart of Nifty (in green) has been superimposed for comparison purposes.

Notable exceptions are the three BRIC countries – Brazil, Russia, China – whose stock indices are well below their 52 week highs. But wait a minute. Isn’t China’s economy showing the strongest growth? Much stronger than India’s? And isn’t the economic growth in USA one of the weakest?

So, how come Nifty is performing better than the Shanghai Composite, and S&P 500 is outperforming Nifty? Just goes to show that economic growth and stock market performance don’t go hand-in-hand.

Australia All Ordinaries vs. NIFTY (in green)

The Australian index has outperformed Nifty after falling behind till Feb ‘13.

Austria ATX vs. NIFTY (in green)

 

The Austrian index has outperformed Nifty throughout the past 12 months.

France CAC40 vs. NIFTY (in green)

France’s economy is still struggling to grow, but its stock index has beaten Nifty hands down.

DAX Germany vs. NIFTY (in green)

Germany’s stock index has outperformed Nifty since Dec ‘12.

MERVAL Argentina vs. NIFTY (in green)

Argentina’s stock index is one of the best performers over the past 12 months – rising almost 150%.

Canada TSX vs. NIFTY (in green)

Canada’s stock index has matched Nifty’s performance but with a lot less volatility.

S&P 500 vs. NIFTY (in green)

The stock index of USA has trounced Nifty handsomely despite sluggish economic growth.

Taiwan TSEC vs. NIFTY (in green)

Taiwan’s TSEC has outperformed Nifty from Feb ‘13 onwards.

Korea KOSPI vs. NIFTY (in green)

KOSPI is the only index among the 10 that Nifty has managed to leave behind.

Malaysia KLCI vs. NIFTY (in green)

Malaysia’s KLCI index lagged behind Nifty till Mar ‘13, but has managed to make up the deficit.

BRIC is old news; CAASH is the new King

An interesting email received a few days ago - from James Anderson, an astute international investor - mentioned that for global fund managers, BRIC (Brazil, Russia, China, India) has become yesterday’s news.

The new block on their investment radar is CAASH (Canada, Argentina, Australia, Singapore, Hong Kong). How does the one year closing chart of the Sensex (in green) compare with charts of the CAASH indices (in blue)? Have a look.

Canada (TSX Composite) vs. Sensex

In the past 12 month, Canada’s TSX Composite index barely managed to eke out positive returns. After lagging behind in Dec ‘11 and Jan ‘12, Sensex has handily outperformed TSX Composite by 15%.

Argentina (MERVAL) vs. Sensex

Argentina’s MERVAL index outperformed Sensex during Jan ‘12, but drifted down to provide negative returns during the past year. Sensex outperformed MERVAL by 20%.

Australia (All Ordinaries) vs. Sensex

Australia’s All Ordinaries index managed 5% returns during the past 12 months. Except during Dec ‘11, Jan ‘12 and May ‘12, Sensex outperformed All Ordinaries.

Singapore (Straits Times) vs. Sensex

After underperforming Singapore’s Straits Times index for most of the year, Sensex managed to edge ahead since Nov ‘12.

Hong Kong (Hang Seng) vs. Sensex

Hong Kong’s Hang Seng index is the only one among the CAASH block that has outperformed Sensex during the past 12 months – except for brief spells in Jul ‘12, Sep ‘12 and Oct ‘12.

Global indices: crack under bear attack

It wasn’t just the Indian market that suffered at the hands of the bears. Global indices cracked as well, even the few that have been showing remarkable resilience so far.

Our trouble-shooting Finance Minister was quick to state that Indian markets were only feeling the effect of a global sell-off, and there was no reason to panic. Those are mere words to shore up our falling market.

The time for soothing words is long over. It is time for action. Tough policy decisions – however unpopular – need to be taken and implemented. Soon. Bears are about to take complete control.

Here are the 6 months closing chart patterns of a few global market indices:

Shanghai Composite China

The Shanghai Composite index has been trading sideways ever since it dropped below the 200 day EMA back in Apr ‘10. It has once again dropped below all three EMAs. Last Friday’s fall has no special significance for a index already struggling to keep the bears away.

Australia All Ordinaries

The Australia All Ordinaries index has been in a down trend since Apr ‘11. The ‘death cross’ of the 50 day EMA below the 200 day EMA in Jun ‘11 confirmed a bear market. Friday’s panic selling has pushed the index deeper into bear territory.

DAX Germany

Except for a few days in Mar ‘11, the DAX index had been in a bull market – trading above a rising 200 day EMA - till Jul ‘11. The index slipped below the 7000 level and the 200 day EMA on Mon. Aug 1 ‘11, and continued to fall through the past week. The ‘death cross’ will confirm a bear market.

Madrid General Spain

The Madrid General index has been in a bear market since May ‘11, making a pattern of lower tops and lower bottoms. Things were bad. They have just turned worse.

IBOVESPA Brazil

The IBOVESPA index has been trending down in a bear market since Apr ‘11. Last week’s selling has pushed the index below a downward sloping channel.

MERVAL Argentina

The Argentine MERVAL index had been trading with a slight downward bias, but stayed above a rising 200 day EMA till Jul ‘11 (except for a few days in Jun ‘11). Friday’s huge drop has changed the equation in favour of the bears.

Asia Pacific Index Chart Patterns – 1 year charts

Three weeks back, I had posted the 5 years chart patterns of the Asia Pacific indices. Today, let us take a look at the 1 year chart patterns.

Shanghai Composite Index Chart

The Shanghai Composite index chart has risen sharply above the 200 day EMA. The 20 day EMA has done the same after remaining entangled with the 50 day EMA for two months. The 50 day EMA is about to cross above the 200 day EMA to confirm a return to the bull market after 6 months.

Such a sharp rise is usually followed by a correction or consolidation. That would provide opportunities to add. Note that the RSI has made a higher top than the one in Apr ‘10, when the index was higher. The positive divergence is encouraging for the bulls.

Hang Seng Index Chart

The Hang Seng index chart pattern reached a 52 week high supported by strong volumes. All three EMAs are moving up with the index above them – a bullish sign.

The RSI has dropped from the overbought zone and failed to make a new high. Use corrections to add.

Taiwan TSEC Index Chart

The Taiwan TSEC index chart had a small correction and dropped below the 20 day EMA down to the rising 50 day EMA after testing the Apr ‘10 top, but has bounced up above the 20 day EMA. Except for a brief stay below the 200 day EMA in May and Jun ‘10, the index has remained above the rising long-term moving average through the year. Sign of a bull market.

The RSI has dropped below the 50% level. There may be a bit of consolidation before the TSEC can move up above the Jan ‘10 top.

Australia All Ordinaries Index Chart

The Australia All Ordinaries index chart is taking support from the 20 day EMA on its way up. The up move that started from the Jul ‘10 low has taken the index above the 200 day EMA, but the Apr ‘10 top may prove to be a tough hurdle.

The RSI is above the 50% level, but has made progressively lower tops as the index moved higher during Sep and Oct ‘10. The negative divergence could be indicating a consolidation before the next up move.

New Zealand NZX50 Index Chart

The New Zealand NZX50 index chart has rallied much more spiritedly since the Jul ‘10 low and has almost regained its losses. Volumes haven’t been all that great.

The RSI is rising above the 50% level, but has made lower tops as the index rose higher. A correction in the offing? Any dips can be used to add. 

Korea KOSPI Index Chart

The Korea KOSPI index chart has been in a bull market through the past year, with the index remaining above the rising 200 day EMA. Twice it sought support from the long-term moving average and resumed its upward move immediately thereafter.

The RSI has dropped to the 50% level while the index consolidated sideways after touching the 1900 mark. Use dips to add.

Malaysia KLCI Index Chart

The Malaysia KLCI index chart has also been in a bull market during the past 12 months. The dip below the 200 day EMA in Jan ‘10 appears to be a data error or a freak trade. Volumes have picked up considerably, which is a bullish sign.

The RSI is above the 50% level, but made a lower top as the index touched the all-time high of 1500. Any corrections will provide opportunities to add.

Singapore Straits Times Index Chart

The Singapore Straits Times charts is in a bull market and touching new highs on a regular basis. The same can not be said about the RSI, which has been making lower tops. Use corrections or consolidations to add.

Jakarta Composite Index Chart

The Jakarta Composite index chart has been the best performer among the Asia Pacific indices during the past 12 months. It is consolidating sideways after crossing the 3500 level. Volumes have remained strong.

The RSI has dropped from the overbought zone towards the 50% level, hinting at a possible correction. Use it to add.

Japan Nikkei Index Chart

The Japan Nikkei index chart is unable to extricate itself from a tight bear grasp, as it keeps sliding below a falling 200 day EMA. A brief up move on good volumes found strong resistance from the long-term moving average.

The RSI has dipped below the 50% level. Looks like there is no end to the misery of the Nikkei index.

Bottomline? The one year chart patterns of the Asia Pacific indices – except the Nikkei - are looking stronger by the day. Jakarta Composite and Malaysia KLCI remain the two best performers. Singapore Straits Times, KOSPI Korea and Taiwan TSEC are the next three that have done well. Stay invested, or add on dips with adequate stop-losses. Investors in Nikkei should get out and redeploy in neighbouring indices.

Asia Pacific Index Chart Patterns – 5 year charts

I have been analysing individual index chart patterns of the Asia Pacific region for quite some time. Hope readers from the Asia Pacific region have found them useful. In today’s post, I wanted to put up the 5 year chart patterns of the various indices in one place. It makes interesting viewing.

Shanghai Composite Index Chart

The Chinese economy is now the second largest in the world – after the USA, and the fastest growing. The Shanghai Composite index chart shows that economic prowess does not necessarily get translated into stock market returns. The index is below the falling 200 day EMA, and is in a long-term bear market since Oct ‘07.

Hang Seng Index Chart

The Hang Seng index chart pattern is doing somewhat better than its mainland counterpart. It is rising above a flat 200 day EMA and has made a bullish inverse head-and-shoulders pattern. But to return to a bull market, the 2007 top has to be conquered – and that is a long way away.

The Taiwan TSEC chart pattern has also made an inverse head-and-shoulders bullish pattern. It is above the rising 200 day EMA, and not too far away from the 2007 top. The TSEC looks the most bullish among the three Chinese indices.

Australia All Ordinaries Index Chart

The Australia All Ordinaries index chart has got its nose above the 200 day EMA, but the long-term moving average is falling. A rise above the 5000 level will form a bullish higher tops and higher bottoms pattern. Till then, it remains in a long-term bear market.

New Zealand NZX50 Index Chart

The New Zealand NZX50 index chart pattern is looking very similar to the Australia All Ordinaries chart – but has only a short climb to form a bullish higher tops and higher bottoms pattern. Both indices need to go past the 2007 tops for the bulls to regain control.

Korea KOSPI Index Chart 

The Korea KOSPI index chart pattern is in a bull market, though it is still below the 2007 top. It is just a matter of time before a new high is touched. The index is taking good support from the rising 200 day EMA on its way up.

Malaysia KLCI Index Chart

The Malaysia KLCI index chart pattern is in a clear bull market – no ‘ifs’ and ‘buts’ here. A bit of hesitation near the 2008 top is to be expected. The index has risen quite sharply. A correction at this stage will be healthy for the long-term bull market.

Singapore Straits Times Index Chart

The Singapore Straits Times index chart pattern is looking bullish – taking support from the rising 200 day EMA on its way up. But it needs to move above the 2007 top, and that could take a while.

Jakarta Composite Index Chart 

The Jakarta Composite index chart is the hands-down clear winner by several lengths in the bullish sweepstakes of the Asia Pacific index charts. It has soared past its previous top and is in ‘blue-sky’ territory. That means there are no known resistance levels.

Japan Nikkei Index Chart

The Japan Nikkei index chart pattern wins the ‘wooden spoon’ – the consolation award given to the last place finisher. How the mighty has fallen. Not only has Japan lost its second place in the global economic stakes, the Nikkei seems ready to plunge to new depths.

Bottomline? The long-term chart patterns of the Asia Pacific indices are widely ranged from extreme bearishness to exuberant bullishness. As a contrarian play, it may be a good idea to book profits in Jakarta and Malaysia and redeploy in Taiwan, Korea and Singapore.