Things have now started to look vulnerable for India's information technology sector even as consumption and auto spheres are poised for a rally, according to veteran technical analyst Martin J Pring.
“Right now the CNX (Nifty) I.T. looks a little bit vulnerable. I don't want to go bearish on it, but it doesn't look as attractive,” Pring, president of Pring Research and chairman of Pring Turner Capital Group, said in an interview with BloombergQuint. “What I thought would do well at this point is starting to roll over a little bit.”
Pring is, however, optimistic about consumption themes even as India's GDP growth is estimated to further slow down to slip below 5 percent in the quarter ended September. What that means is there are no now signs of a rebound in a prolonged slowdown as stagnant wages and liquidity crunch turned buyers cautious.
“The CNX Auto looks like it's bottomed out. Also, (I am) watching metals and commodities because they are tied into global cycle and if the global cycle turns, these will be places to look at,” Pring said. “The consumption index looks interesting from a bullish point of view.”
If these Indian sectors are adjusted for their local currencies with their American equivalents, they move along very similar lines, Pring said. “For example: If you take the CNX Financial Index and compare it to the XLR, which is an ETF traded in New York, adjust it for the currency, it has a very close relationship.” The magnitude differs, he said, but the highs and lows are very similar.
Watch | Technical Analyst Martin J Pring talks chart-gazing to read the Indian markets.
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