The Indian Market Broke Before China

As a follow up to the 10 Myths column, consider this chart, send in by an astute reader, of Bombay Stock Market.

Note that Indian Markets have been softening since early February, giving up over 1,000 points from their Feb peak. They finally broke trend days before the debacle hit in China.

You can draw the lines in many different ways, but they all lead to a major break the primary trend: 


We can draw quite a few conclusions about this — including something trendy about the interconnectedness of global markets.


But this is further fuel to my argument against "all of this was started by China." Something was clearly occuring in the Emerging Markets prior to the plunge in China.   

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What's been said:

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  1. Bluzer commented on Mar 5

    Too soon to call this one. Last summer’s decline was sharper and deeper than this one – atleast so far. And proved to be a bear trap. The macro picture, particularly globally, is worse this time around, but I’d still hold off on any pronouncements.

  2. sam commented on Mar 5

    what is the best way to short indian market from US..
    short IBN?
    IFN is weird.
    INFY is another good indian tech short candidate.

  3. Craig commented on Mar 5

    Note RSI…..under 30 for the entire index?
    Looks like it weakened in early Jan.
    Maybe prepare to be a buyer later as it weakens further.

  4. UST commented on Mar 5

    A thought for the crowd. In the new globalized marketplace, perhaps a correlation that the market or index that has been the leader, is the one that brings the market as whole down?


  5. Lauriston commented on Mar 5

    Looks like some smart people started “unwinding” their positions (carry or no carry) long before the whistle was blown. more reason why it is better to follow price action and volatility indexes as I do. Anyway, you have covered this “debacle” better than anyone else Barry!

  6. Mr. Beach commented on Mar 5


    Last year, you did some great posts on mystery spikes in S&P futures contracts (I think). I believe it was suggested that these unusual mystery buyers may have helped goose the market up.

    Is anything like that happening today on the trading platforms you have access to?


  7. Bakshi commented on Mar 5

    Move in the Indian markets is mainly for the following 5 reasons

    Value of Dollar vs. Indian Rupee
    Value of Euro vs. Dollar
    Over extended markets
    Future exports to US and Europe

    I don’t think shorting Indian markets is a good idea at this time.

  8. Strasser commented on Mar 5

    Barry, this is out of context with what you have written and for that I apologize in advance, but this ( begs to be viewed. Anyone think they are advertising to the ‘mature thinking shopper’?

  9. sasso commented on Mar 5

    Not China, not India. Freddie Mac. Now the question is whether the subprime implosion is a leading or lagging indicator

  10. OldVet commented on Mar 5

    The Indian central bank raised bank reserve requirements and also the “Fed rate” short term. The redhot real estate market in Gurgaon has dried up, and prices are down some 10%. Then and only then did the BSE come down, even while foreign investment continued to flood into the stock market in India. As in the US, the basic cause is local.

  11. Neal commented on Mar 5

    Hedge funds pulling hot money from hot markets to cover calls and losses.

  12. Dan commented on Mar 6

    Bluzer, I was the reader who sent the trend break chart to Barry. IBN puts were my play, along with LFC and BBD because the emerging markets were clearly deteriorating and India signaled a breakdown to me.

  13. jj commented on Mar 6

    Well give yourself a cigar. Hopefully you sold yesterday.

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