The US is Range-Bound, but What About India?

Last week, JC Parets appeared on India's 'ET NOW' to give his viewpoint on where we stand in regards to US indices and other global markets.

To begin with, JC points out that we are still in the middle of a very wide range in the Dow Jones Industrial Average ($DJIA). In September/October of last year, we failed to breakout above the highs from January 2018, which led to a sharp correction over the final months of the year. However, he doesn't believe we will see any "extreme" trends, like the one we experienced in Q4 2018. We are in a structural range and there will be short-term swings in both directions, particularly because we are in an environment with a flat 200-day MA. And what about the recent outperformance from Emerging Markets? Last year we saw flows move out of Emerging Markets and into stocks in Developed Markets. So far in 2019, that trend has reversed. Specifically, JC points to the relative strength we have seen in Latin America ($ILF), going back to late last year. Beginning in October, as US equities began to sell off, Latin American stocks showed remarkable resilience. In the past, when these types of stocks have shown a divergence of this fashion, the "ensuing trends have tended to last not months, but years."In regards to Indian stocks, JC says the 10500 level on the Nifty 50 ($NIFTY) is his line in the sand, and as long as we are above this area, there's "no question" that we should be long equities. Speaking on the Nifty Bank ($BANKNIFTY) index , we want to watch the highs from last January, around the 27500 level. He thinks we could possibly get to 33000 on this index.One stock in particular to keep an eye on is ICICI Bank ($ICICIBANK). If we are above 360, there is potential for it to rise to 475.JC also says that the recent rally in Indian Small Caps ($SMIN) is "evidence of risk appetite" and not risk aversion. If this trend continues, he believes equities as a whole should do well.Overall, JC seems to see a lot of bullish sentiment underneath the surface when it comes to Indian equities, but doesn't see any long-term trends developing here in US until we move out of the range we have been in. As Financials are a large weighting in Indian indices, such as the Nifty 50, strength in names like ICICI Bank should continue to boost Indian stocks higher, as a whole.