Thousands of people are feared dead from the worst Indian monsoon
season in decades and more rain is in the forecast. The benchmark Bombay Sensex Index has held up
better than most emerging markets this year, down about 4%, but if you bought
it with US dollars it has been much worse as the Indian Rupee has been washed
out with the rain. Quant doesn’t analyze
weather or currencies but the EGShares India Infrastructure Fund (INXX) has risen with the flood
levels up to today’s 4th place.
It ranked as low as 213th place on June 7th before
the rains.
Calling bottoms is tricky and INXX is at the lowest point of its
almost three year life as other India funds struggle to hold above their 2012
lows. Its 57.4 technical score is evenly
balanced across the three timeframes but is nothing to get excited about. Sentiment is better at 68.6 as bears watch the
water rise and the Rupee fall. Global
Theme and Quality scores are below 50 which contribute to a higher than average
6.37 Red Diamond Risk Rating so keep a close on eye on this one if you put it
in your portfolios. The reason Quant has
highlighted INXX is its 97.2 Fundamental Score with high 90s across all four fundamental
categories. That accounts for half of
the Green Diamond Reward Rating which comes in at 9.77, today’s second highest.
India’s government knows they need to do more to develop their infrastructure
and announced plans yesterday to ease caps on foreign direct investment.
That should help to support the Rupee as companies rush in to help
rebuild that infrastructure so their planes, trains and autorickshaws can reach
more of the country’s 1.2 billion people.
India’s travel and telecommunications infrastructure was famously
inadequate even before the monsoon washed so much of it away and the 30 companies
in INXX should benefit from the rebuilding efforts. Our thoughts and prayers go
out to the suffering people in India but Quant is a cold, heartless algorithm
lacking any such sentiment. INXX is one
of several higher risk names reaching the upper ranks which may suggest a
bullish reversal, or it could be these names have just gotten too washed out. If you think emerging markets are due for a
bounce, take a look at INXX but don’t forget to also keep an eye on the Rupee.
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