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The World's Hottest Emerging Market Presents A Leveraged Opportunity

ETF Professor

As has been widely documented, India is one of the leaders of this year's emerging markets rally. The two largest India exchange traded funds trading in the U.S., both of which focus on large-cap stocks, are each up more than 25 percent year-to-date, easily outpacing the MSCI Emerging Markets Index, which is up less than 20 percent.

This has led to quite the rally in the Direxion Daily MSCI India Bull 3X Shares (NYSE: INDL), the leader among leveraged India ETFs. INDL attempts to deliver triple the daily returns of the MSCI India Index, one of the most widely followed gauges of Indian equities by foreign investors, and is up a whopping 77 percent in 2017. 

INDL is one of six leveraged bull ETFs that are single-country emerging markets funds in the Direxion stable. Direxion, one of the largest issuers of leveraged ETFs, also offers leveraged bull plays on Brazil, China, Mexico, Russia and South Korea. 

“From a technical perspective, INDL is currently in a short-term uptrend as indicated by upward trending price action," according to Direxion. "INDL percentage of positive days in the last 30-days is above 60 percent. The 7-day moving average has crossed the 20-day moving average, supporting a possible uptrend continuation from a technical perspective.”

With INDL's technical outlook sturdy over the near-term, the ETF could be an idea to consider for risk-tolerant intraday traders.

The index INDL attempts to deliver triple the daily returns of allocates over 23 percent of its weight to financial services stocks and another 16 percent to technology stocks. The consumer discretionary and energy sectors combine for almost 23 percent of the benchmark's weight.

Top holdings in the fund include Housing Development Finance Corp Ltd (NSE:HDFC), Infosys Ltd ADR (NYSE: INFY), and Reliance Industries Limited (NSE: RELIANCE). 

“We note that the momentum indicators continue to signal a positive trend in the short-term,” said Direxion, noting that RSI is above 50 and the widening spread between the MACD line and signal line. "A continual widening spread between MACD and the signal line continues to support the current technical trend.”

INDL is up 6 percent over the past week and resides more than 5 percent above its 50-day moving average. The ETF is 1.6 percent below its 52-week high.

Image credit: Wikimedia Commons

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