There was a time in which people who were willing to risk capital in exchange for high profits were recommended to invest in the two giants of the East: China and India. Now they have become a regular option that some people have in mind, but without being bombarded with the advertising they once had. So how are things going?
In this article, we will focus on the SSE 50 index from China and the Nifty 50 from India.
SSE 50
SSE 50 did topped out in June 2015 and went down until March 2016, and since then it has been recovering with some scares in the process. Most recently, we had a relative high in February 2018, a low in December 2018, and now it seems to be in a sideways market waiting for a decision about where to go.
The good news is that it is above its 30-week exponential moving average and has twice up again. On the other hand, it has not been able to go through its resistance made in April 2019. In our opinion, those are the two references we have to keep an eye on. If it breaks the resistance, it could go up to try to surpass the relative high of February 2018. If that should happen, it would produce very good profits. Until then, we would stay away from it.
Nifty 50
Nifty 50 has been giving a lot of joy to its investors in the last years; although when corrections happen, they are tough.
However, there was a trend line that was touched on February and December 2016, and October 2018, and seems to be broken now. The index is just behind it, but not for a big difference, so it is not clear whether it is a real rupture or not.
We think that the next two weeks will be essential. If it goes back to rising and it surpasses the 30-week exponential moving average with strength, the index should attack its high and maybe surpass it. If it remains below the trend line mentioned before, it will become a resistance level and we could be facing a new lateral or correction. This is important because the market is not always going up or down, but many times it is just in laterals.
Conclusion
When investing, it is important to have a plan. Nifty has been rising so much, that it is difficult to set a stop-loss. On the other hand, in SSE 50 we could use the moving average as a stop-loss, so if there would only be two options in the investment world, we would choose China because it allows us to limit the risk taken.
Please always remember that we cannot predict what will happen. This analysis, in our opinion, expresses what is more likely, but we always consider that it is possible that just the opposite might happen. Thus, the intent of this article is just to be informative and never to be an investing recommendation. For that, you should ask your personal finance advisor.
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