Technical charts are indicating the possibility of future leadership of the Indian equity market, once the dust settles on the current crisis, according to veteran portfolio manager Dave Lundgren.
The Sensex's relative strength in local currency is typically negatively correlated with the dollar-rupee movement, but this is currently at its highest positive correlation since 2000, Lundgren, a CMT, and founder and chief strategist at MOTR Capital Management and Research, told BQ Prime.
"What I find interesting is that as strong as the dollar has been against the rupee, the Sensex has, regardless of that, been outperforming the S&P 500," Lundgren said, on the sidelines of the CMT Association's summit in Mumbai.
"The market is giving you one of those tells, as to what is likely going to be the future leadership once the dust settles on this crisis that we're in. I want to be really mindful about owning emerging markets with a special eye on India, because it has been incredibly strong."
At the same time, Lundgren is cautious on the U.S. equity market. He pointed out that long-term charts have shown deterioration in the correction in U.S. markets this year, something that hasn't happened since the start of the bull market after the global financial crisis.
As a result, he is a lot less inclined to buy oversold conditions in the U.S. market.
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