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.

Global indices vs. Sensex

Many investors, including fund houses, have been taken by surprise by the strong surge in the Indian stock market during the past year. FIIs have shown their faith by remaining net buyers throughout. The Sensex is trading very close to its 52 week high touched in Jan ‘13, and is a short distance away from its all-time high.

The bullishness is not limited to the Sensex alone. Many global indices are looking just as bullish as the Sensex. Some are at life-time highs. Here is a look at the one year charts of four global indices (in blue) compared with the Sensex (in green).

Jakarta Composite vs. Sensex

Jakarta Composite and Sensex have gained an almost identical amount during the past 12 months. Note that Jakarta faced the last major correction back in May ‘12, while Sensex had a good correction during Feb-Mar ‘13. Sensex should resume its outperformance.

Germany DAX vs. Sensex

After moving neck-and-neck till Feb ‘13, Germany’s DAX index has strongly outperformed Sensex during the past 2 months. DAX is currently at a life-time high, but RSI is looking extremely overbought.

Dow Jones vs. Sensex

Though Dow Jones index is near a life-time high, it has underperformed the Sensex during the past year. RSI is overbought, and showing negative divergence by failing to touch a new high.

Argentina MERVAL vs. Sensex

Argentina’s MERVAL index underperformed the Sensex till Nov ‘12, but has surged ahead since then. The Sensex is near a life-time high, but RSI is looking overbought, and a correction may be on the way.

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.

Comparative performance of Sensex and global indices

One keeps reading and hearing that the Sensex has been one of the worst performers among global stock indices over the past one year. So I decided to take a look at some of the leading global indices (in blue) to check whether the Sensex (in green) has been an underperformer or not.

Here is what I found:-

S&P 500 vs. Sensex

The S&P 500 index has not only outperformed the Sensex by a wide margin, but has eked out a 5% gain over the past year despite the economic slow down in the USA.

FTSE 100 vs. Sensex

The UK economy is in a bad shape with growth almost non-existent. Still, the FTSE 100 has outperformed the Sensex right through the past year – despite losing 5%.

DAX vs. Sensex

The German economy is stronger than the UK’s, but the DAX has lost 10% over the past year. Despite the steep fall in Aug ‘11, it managed to outperform the Sensex.

Bovespa vs. Sensex

India is no match for Brazil on the soccer field, but the Sensex has managed to outperform the Bovespa by more than 5% over the past year.

MERVAL vs. Sensex

The Argentine index has not gained during the past year, but has outperformed the Sensex by a wide margin.

Hang Seng vs. Sensex

Hang Seng is the only other major global index that has underperformed the Sensex, thanks to its steep fall over the last two months.

Jakarta Composite vs. Sensex

The Indonesian index has been one of the best performers in Asia, though it has made zero gains during the past year. It has significantly outperformed the Sensex.

KLCI vs. Sensex

The Malaysian index outperformed the Sensex throughout the past year, though it has lost about 3%.

The Sensex has indeed been an underperformer against major global indices – with the exception of the Bovespa and the Hang Seng. India’s economy is still growing in spite of the recent slow down due to high interest rates. When the turnaround comes, the index is likely to become an outperformer.

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.

American Index Chart Patterns – one year charts

Last month, I had taken a look at the 5 year chart patterns of American indices. The S&P 500 and the Canada TSX charts remained well below their all-time highs and were struggling to cross their Apr ‘10 tops. The Brazil BOVESPA chart was a little below its all-time high. The Mexico IPC and the Argentine MERVAL charts were at new all-time highs.

Some interesting changes have occurred since last month’s post, which the one year chart patterns of the American indices will reveal:

S&P 500 Index Chart

Last week, the S&P 500 index chart moved marginally above the intra-day and closing high levels touched in Apr ‘10. The 50 day and 200 day EMAs are rising with the index above them. Note that the 50 day EMA straddled the 200 day EMA for two months before moving up. The S&P 500 has made a bullish pattern of higher tops and higher bottoms. All point to a revival of the bull market.

That was the good news. Now the bad. By dropping below the 1200 level and failing to move significantly above the Apr ‘10 top on reduced volumes, the index may be forming a bearish double-top pattern. The double-top can be confirmed only if the index falls below the Jul ‘10 low. Should that happen, the S&P 500 index chart can drop to 900.

The bearish possibility will be negated if the index bounces up after finding support at the 50 day or 200 day EMA. Such an upward bounce will be an adding opportunity.

Canada TSX Composite Index Chart

The Canada TSX Composite index chart touched a new 52 week closing high of 13052 on strong volumes – well above its Apr ‘10 top of 12281. Like the S&P 500, it is facing a bit of correction.

Note that the 50 day EMA formed a bullish saucer-like pattern and didn’t fall to the 200 day EMA. The TSX Composite index had dipped below the 200 day EMA for only 7 trading sessions during the past 12 months and remains in a bull market. Use the dip to add.

Mexico IPC Index Chart

The Mexico IPC index chart touched a new all-time high of 36814 last week and ended up gaining almost 1600 points (4.5%) since my previous post.

Bulls are in complete command, and the dip following the new high is an adding opportunity. Note that the IPC index hasn’t dropped below the 200 day EMA even once during the past year.

Brazil IBOVESPA Index Chart

The Brazil IBOVESPA index chart comfortably crossed its Apr ‘10 intra-day and closing highs with more than 1000 points to spare, but fell 400 points short of its all-time high of 73517 (touched in May ‘08).

The bears launched a strong attack to take the index down to the 70000 level and the rising 50 day EMA. Note that the RSI has been rising while the IBOVESPA index has been correcting. The index is likely to resume its up move soon.

MERVAL Buenos Aires Index Chart

The Argentine MERVAL index chart pattern touched a new all-time high of 3381 on Nov 5 ‘10. The index has risen too steeply above the 50 day EMA and is looking overbought.

The RSI has been inside the overbought zone for the past three weeks, which is unusual. The correction may last a little longer.

Bottomline? The one year American index chart patterns are in bull markets of varying strengths. Stay invested with trailing stop-losses, or add the dips.

American Index Chart Patterns – 5 year charts

The long-term American index charts are showing contrasting patterns. While the USA and Canada are struggling to get back into a bull market, having barely crossed the 50% Fibonacci retracement levels of their bear market falls, Mexico and Argentina are trading at all-time highs. Brazil is less than 4% below its all-time high.

Here are the 5 year charts of some of the American indices.

S&P 500 Index Chart

The S&P 500 index chart has crossed the hurdle of 1150, and has closed above the flat 200 day EMA. The Apr ‘10 closing high of 1217 has to be crossed convincingly for the bulls to regain some control. The Oct ‘07 closing high of 1565 is way out of sight.

Canada TSX Composite Index Chart

The Canada TSX Composite index chart is in a slightly better shape than the S&P 500 chart. The Apr ‘10 top has been crossed, forming a bullish ‘higher tops and higher bottoms’ pattern. The Apr ‘08 closing high of 14321 is almost 1800 points away.

Mexico IPC Index Chart

The Mexico IPC index chart is at an all-time high, and it looks like it isn’t done yet. One of the best performing markets not only in the Americas, but worldwide.

Brazil IBOVESPA Index Chart

The Brazil IBOVESPA index chart is still 2700 points below its May ‘08 high of 73517. It may be a matter of time before the index reaches a new all-time high. In spite of all the noise about the economic growth of the BRIC countries, the Brazil index chart hasn’t quite made it to the top of the heap – though it is one of the better performers.

MERVAL Buenos Aires Index Chart

The Argentine MERVAL index chart gets the gold medal amongst the American long-term charts. Quite a comeback for a country that was in a state of economic turmoil and high inflation just a decade back.

Bottomline? The 5 years US and Canada index charts are showing the effects of over-leveraged economies and debt mismanagement. Mexico, Brazil and Argentina index charts are faring much better and are among the best performers world-wide. Booking profits in Mexico and Argentina and deploying in Canada may be a good contrarian play.