Crack emerging in the BRIC

In economics, BRIC is an acronym that refers to the fast-growing developing economies of Brazil, Russia, India and China.

In this article, I have reviewed the main indices of BRIC nations and guess what’s the outcome - there is a clear crack that has emerged in BRIC block. The crack sadly is because of Indian market. Every other market just looks fine

Brazil: Takes support at 50 dma

Brazil has been one of the strong markets this year - thanks to massive rise in commodity prices and lots of +ve sentiment towards Brazil. Sometimes, you have everything going your way…Brazil also won the 2016 Olympic bid.

Source: www.stockcharts.com

Russia: Doing well and continues to trade above 50 dma

I hope I have used the right index for Russian market. I always get confused on this market.

Source: www.stockcharts.com

INDIA: Conclusive Breakdown below 50 dma/100 dma

There is a saying - when a momentum market breaks 50 dma - one should never take it lightly because the market setup is ripe for panic. Remember, how China cracked in August despite other Global markets holding up well. It appears it is the same pattern getting played out in India right now.

Source: www.stockcharts.com

China - Recovered from August massive sell off

One of the reasons why many market participants are hopeful on Indian market - China’s recent example. The Chinese Shanghai Composite index had a steep fall and then spectacular rise. The Chinese market is now well above 50 dma.

Source: www.stockcharts.com

Summary

All BRIC markets are in fine shape trading above 50 dma except Indian market. The most surprising part - there has been no global trigger for the sell off. The sell off argument - Disappointing earnings + Steep Valuation was perfect setup for fall

Indian market more aligned to US market

S&P 500 has also cracked below 50 dma. But, thankfully, there has been no follow through selling. The joker in the pack - US Dollar. What USD might do from current levels will decide the direction of S&P 500?

Source: www.stockcharts.com

Looking Ahead:

Indian market is oversold but that is no guarantee for bounce. It all depends on what USD, S&P 500 does from here. One thing is certain - Indian market is technically very weak and hence on any sell off in S&P 500 - Indian market might get hammered some more. It’s time to be careful both on long as well as short side. SHORT Side because we are so oversold; and LONG side because we are technically so weak at current juncture.