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.

European indices: crack under severe bear attacks

We keep reading and hearing about the poor economic growth and sovereign debt problems in Europe. One would expect the stock markets to perform badly. But through the past 12 months, most European indices have performed remarkably well – while the Indian stock market has been in a 10 months long down trend despite much better economic growth.

Things have changed of late. Even as our stock indices continue to struggle in bear markets, European indices have cracked under severe bear attacks. Most have dropped below their 2010 lows. Some have slipped to 2 year lows. The charts will tell the story:

Austria ATX

Austria’s ATX index peaked at 3000 back in Feb ‘11 and started correcting. The ‘death cross’ in Jul ‘11 confirmed a bear market. A vertical fall has dropped the index to a 2 year low in Aug ‘11. A ‘dead cat bounce’ has been followed by more selling. The index has lost more than 30% from its peak.

France CAC 40

France’s CAC 40 index has fared marginally better than Austria’s index. It dropped just under 30% from its peak, but also to a 2 year low.

Germany DAX

Germany’s DAX index had been a spectacular performer, till the first big crack appeared in Mar ‘11. The index went on to touch a peak of 7500 in May ‘11. A period of sideways consolidation concluded with a vertical drop to the Feb ‘10 low. The index has lost about 28% from its peak.

Holland AEX

Holland’s AEX index has fallen to a 2 year low, losing about 27% from its Feb ‘11 peak. The ‘death cross’ confirmed a bear market in Jun ‘11, so the recent crash should not have come as a big surprise.

Norway OSEAX

Norway’s OSEAX index has corrected more than 25% from its Mar ‘11 peak, but found support near its Aug ‘10 low. It is trying to consolidate before resuming its down move.

Sweden OMXSPI

Sweden’s OMXSPI index has also corrected more than 25% from a double-top at 375 to levels last seen in Oct ‘09.

Switzerland SMI

Despite the strength of the Swiss franc, Switzerland’s SMI index has been correcting since hitting a peak near 7000 back in Apr ‘10. More than a year’s sideways consolidation within a rectangle culminated in the ‘death cross’ in Jun ‘11.

Some experts on business TV channels have opined that FIIs will have no choice but to buy in India and other emerging markets - to chase growth that is lacking in their home markets. I have my doubts. FIIs would be less interested in chasing growth. Their main job will be to protect capital. That means booking profits in emerging markets to cover up the losses in their home markets. Their selling in India may continue till the global economy starts showing clear signs of recovery.

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

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

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

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

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

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

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

Swiss Market Index Chart

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

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.

European Index Chart Patterns – 1 year charts

The 5 years European index chart patterns – except Stockholm General and DAX - were struggling around their 50% Fibonacci retracement levels and 200 day EMAs when I looked at them earlier this month.

Things appear to have improved since then – if not in the respective economies, definitely in the stock market sentiments – as the 1 year charts depict below.

Austria ATX Index Chart

The Austria ATX index chart is above its three rising EMAs, and has made bullish higher tops and bottoms since the Jul ‘10 low. Crossing the Apr ‘10 top will put the bulls back in the driver’s seat.

France CAC 40 Index Chart

The CAC 40 index chart has been one of the laggards. Despite the wide-scale protests against the austerity measures, the index is showing bullish tendencies as it makes higher tops and bottoms. The RSI is indicating that the going will not be very smooth for the bulls.

Germany DAX Index Chart

The DAX index chart continues its impressive performance – receiving support from the rising 200 day EMA. The German index has been in a bull market for more than a year, and keeps making new highs – reflecting a stronger economy.

Netherlands AEX General Index Chart

The AEX General index chart hasn’t been able to make too much headway. It has been trading between 300 and 360 for the past year, but remains above the rising 200 day EMA – the sign of a bull market. The RSI indicates that the current correction may last a little longer.

Oslo All Share Index Chart

The Oslo All Share index chart has just edged above the Apr ‘10 top and the bull market is expected to gather strength. The lower top on the RSI means there may be speed bumps along the way.

Madrid General Index Chart

The woes of the Madrid General index chart are far from over. The brief bullish aspirations seem to have been snuffed out by the plummeting RSI. The Spanish index remains the underperformer among the European indices.

Stockholm General Index Chart

The Stockholm General index chart – the best performer – is facing a bit of headwind after touching the 350 mark. The negative divergence in the RSI may cause a deeper correction. The rising 200 day EMA has provided good support during earlier corrections. There is no immediate threat to the bull market.

Swiss Market Index Chart

The Swiss Market Index chart is faring marginally better than the Madrid General, but remains an underperformer. For the past 6 months, the 6500 level has provided strong resistance.

UK FTSE 100 Index Chart

The FTSE 100 index chart made a valiant but unsuccessful effort to get past its Apr ‘10 top. The recently announced austerity measures seem to have dampened the bullish fervour. The RSI has slipped below the 50% level and is showing negative divergence. The bears may tighten their grip. The index is well above the rising 200 day EMA, so there is no immediate threat of a trend change.

Bottomline? The 1 year European index chart patterns are suggesting that the various austerity measures will strengthen the economies in the long run, but will act as a deterrent to faster growth. The gains from the markets are likely to be muted. Time to take a look at emerging market investments?

European Index Chart Patterns – 5 year charts

The European index chart patterns are struggling around the 50% Fibonacci retracement levels of their entire bear market falls. That means, technically, they are still in long-term bear markets. Some are trading above their 200 day EMAs, in an effort to return to a bull market. Here are the 5 year charts of some of the European indices.

Austria ATX Index Chart

The Austria ATX index is just above the 200 day EMA, but is one of the worst performers of the European indices. It has failed to get close to the 50% retracement level of its bear market fall. The long-term moving average is drifting downwards.

France CAC 40 Index Chart

The CAC 40 index, like the Austria ATX index, has been scraping bottom – failing to regain even 50% of its bear market fall. The 200 day EMA has started to slip down, and the index is likely to follow.

Germany DAX Index Chart

The DAX index chart is moving up above a rising 200 day EMA – sign of a bull market. It has moved past the 50% retracement level of its bear market fall, but is well below its 2007 top. Crossing the 2008 top of 7000 will be the first priority to restore the bullish health of the index.

Netherlands AEX General Index Chart

The Netherlands AEX General index chart is trying hard to reach the 50% retracement level of its bear market fall – trading just above a flat 200 day EMA. The index has been trading in a sideways rectangular band of about 50 points for a year now. Such a long sideways consolidation could lead to a strong break out upwards.

Oslo All Share Index Chart

The Oslo OSEAX index chart has exactly retraced 50% of its bear market fall, and is trading above the 200 day EMA. The index has been trading in a 70 point sideways channel for the past year, and is likely to break out upwards.

Madrid General Index Chart

The Madrid General index chart is one of the underperformers – along with the Austria ATX and France CAC 40 index charts. The index is about to drop below the flat 200 day EMA and remains in a long-term bear market.

Stockholm General Index Chart

The Stockholm General index chart is back in a bull market – making higher tops and bottoms above a rising 200 day EMA. The Swedish index is one of the better performers, along with the German DAX index.

Swiss Market Index Chart

The Swiss market index chart has slipped below the falling 200 day EMA. It managed to retrace 50% of its bear market fall before dropping down. The index is one of the underperformers among the European indices.

UK FTSE 100 Index Chart

The FTSE 100 index chart is making a determined effort to fend off the bear grasp – but hasn’t been too successful so far. London is still considered by some to be the financial capital of the world. The FTSE 100 chart seems to be singing the Gershwin song: It ain’t necessarily so.

Bottomline? The 5 years European index charts are showing the clear effects of the economic downturn. The quantitative easing programmes haven’t worked very well so far. The Swedish and German markets are showing promise. The Oslo All Share and the Netherlands AEX indices can also be considered for investment. The rest should be avoided till they show signs of recovery.