India's Nifty 50 Breaks Out in 2023, Expecting A PauseSo far this year, the iShares MSCI Emerging Markets ex China ETF (EMXC) is up 17% total return. The performance across EM, including the world’s second-largest economy (China), is not as strong. The iShares Emerging Markets ETF (EEM) is up less than 7% with dividends included. Among the standout countries in 2024 is India. Its Nifty 50 Index broke out to fresh all-time highs earlier this month, helping to showcase the broadening out of the equity rally in 2023. The index, heavy into Financials stocks but also with a significant weight to the Information Technology sector, catches macro investors' attention for access to a country with strong population growth trends.
I assert that the Nifty 50 has a bit more room to run, but expectations should be temperated heading into 2024. I took a look at the historical trends on the Nifty 50 Index. In the last 20 years, January and February each have averaged negative total returns with positivity rates below 50%. Investors often must wait until March and April for decent gains. Of course, seasonality comes second to price, so let’s delve into the technical situation and my ‘chart of the week.’
I see some near-term resistance potential around the 22,000 mark. I arrive at that conclusion based on the trading range and breakout from late 2021 through the middle of this year. Resistance was seen near 18,700 while the 2022 low of just under 15,400 made for a range of about 3,400 points. Add that height on top of the breakout point of 18,700, and we get a target of 22,100. That is only about 3% above the current index level. So, while the long-term trend in the Nifty 50 is strong, an early-year pause may be in the works. Investors can play the Nifty 50, albeit with some currency differences, through the iShares India 50 ETF (INDY).
