Back in August 2018, we sold all our positions in Indian equities as we were worried about higher interest rates and the overvaluation of the Indian stock market.
The Indian Rupee had started depreciating since January 2018 losing almost 18 % of it value this year. India’s inflation has been rising towards the 4 % markets, forcing the Central Bank to raise interest rates and we see the currency move as having now ended.
Indian stocks fell sharply since then, losing about 12 % of their value while small capitalisation stocks fell even more. The main SENSEX Index is now trading close to its 2016 uptrend support.
Interestingly enough, The India Fund Inc., one of our preferred ETF for investing in India has corrected by much more, losing 20 % of its value and is now trading at a 12 % discount ( see DES below ) from its own NAV and is trading at a major support level dating back to 2016.
The iShares MSCI India small cap that we had been investing in successfully lost 30 % of its value since January and 27 % of its value since we sold in August. There again it trades close to a very strong 2016 support.