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Big India ETF on the Cusp of a Big Breakout


Fueled by the run-up to and confirmation of Narendra Modi’s landslide victory in the country’s recent national election, India exchange traded funds have blown away single-country emerging markets rivals this year.

Heading into Monday, the Market Vectors India Small-Cap Index ETF (SCIF) was up 51% year-to-date, making it the second-best non-leveraged ETF of any variety.

Among the four major country-specific ETFs tracking BRIC nations, the WisdomTree India Earnings Fund (EPI) is by far this year’s best performer with a pre-Monday gain of 28.5%. That is nearly quadruple the performance of the iShares MSCI Brazil Capped ETF (EWZ) , the second-best performer in the aforementioned BRIC quartet. [Foreign Investors Return to Indian Stocks]

Ebullience toward Indian equities and the corresponding ETFs recently helped EPI regain admittance to the $1 billion in assets under management club. To be precise, the largest India ETF had $1.25 billion in AUM as of May 30. [WisdomTree has 10 ETFs With $1B or More in AUM]

Several India ETFs, including EPI, were among May’s best ETFs, but last week, those funds succumbed to some profit-taking. [May's Best ETFs]

That profit taking appears to be short-lived because as of this point Monday, six of the day’s top seven non-leveraged ETFs are India funds. EPI is a member of that group a 3% gain. What is important about Monday’s action in EPI is that the ETF is back in position to break trendline resistance that dates back to 2012.

That is significant because all though EPI has surged this year, the ETF is still 30% its all-time high set in late 2010.

The chart “reflects that the strong rally has taken EPI to the top of a trading channel and momentum is reaching lofty levels, actually the highest in the past four years,” notes Chris Kimble of Kimble Charting Solutions. “A breakout of this channel would be a big positive event for EPI should it happen. The chart does reflect that  EPI’s upside has been a little limited when momentum is at current levels over the past few years.”

WisdomTree India Earnings Fund


Chart Courtesy: Kimble Charting Soluitions