Thursday, May 9, 2013

Global indices vs. Sensex

Many investors, including fund houses, have been taken by surprise by the strong surge in the Indian stock market during the past year. FIIs have shown their faith by remaining net buyers throughout. The Sensex is trading very close to its 52 week high touched in Jan ‘13, and is a short distance away from its all-time high.

The bullishness is not limited to the Sensex alone. Many global indices are looking just as bullish as the Sensex. Some are at life-time highs. Here is a look at the one year charts of four global indices (in blue) compared with the Sensex (in green).

Jakarta Composite vs. Sensex


Jakarta Composite and Sensex have gained an almost identical amount during the past 12 months. Note that Jakarta faced the last major correction back in May ‘12, while Sensex had a good correction during Feb-Mar ‘13. Sensex should resume its outperformance.

Germany DAX vs. Sensex


After moving neck-and-neck till Feb ‘13, Germany’s DAX index has strongly outperformed Sensex during the past 2 months. DAX is currently at a life-time high, but RSI is looking extremely overbought.

Dow Jones vs. Sensex


Though Dow Jones index is near a life-time high, it has underperformed the Sensex during the past year. RSI is overbought, and showing negative divergence by failing to touch a new high.

Argentina MERVAL vs. Sensex


Argentina’s MERVAL index underperformed the Sensex till Nov ‘12, but has surged ahead since then. The Sensex is near a life-time high, but RSI is looking overbought, and a correction may be on the way.

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