ETF Investments in EMs

Last week we had seen some semblance of support for markets using a contrarian indicator called the Bollinger Band. The markets did stabilise and the Bank Nifty did attempt upward moves and it remains to be seen whether the follow through action continues.

In the meanwhile, the Emerging Markets (iShares Core Emerging ETF) have started showing some signs of a similar support at critical levels – again a contrarian call using Bollinger (again!). In the last week, the index (ETF) attempted pullbacks.

The RSI indicator, coinciding with recovery back into Bollinger on the ETF, suggests potential rallies.

We also used a linear regression (200 Day) to test whether current levels hold any relevance, and it does look like the Bollinger lower band coincides with a 200 Day linear regression lower bound which strengthens our conviction further.

A very similar move could be developing in the BSE Midcap Index as the Linear Regression lower bound supports are placed very close to current levels and any upward spikes may gather steam.

Watch the market moves carefully for the next few days and use your favorite ways to keep stops, participate in rallies if accompanied by volumes.

No immediate triggers exist currently but at current levels, and with so much pessimism, any trigger will get a larger-than-life bounce!

Disclaimer: Remember the above is not a recommendation and is issued only as an observation. One must use their own criteria to judge investability of these or similar instruments.

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