INDY: Catalysts In Focus

seekingalpha03-06

da-kukThe iShares India 50 ETF (NASDAQ:INDY) is performing well, but has already come a long way in the last 12 months and is approaching the all-time high of $53.83. With two major drivers in focus -...

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With two major drivers in focus -...</p>\n\n<a href=\"https://seekingalpha.com/article/4676181-indy-etf-catalysts-in-focus\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"FWD","symbol_name":"AB DISRUPTORS ETF","start_time":0,"source_url":"https://seekingalpha.com/article/4676181-indy-etf-catalysts-in-focus","article_id":"2417282187","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1365550676/image_1365550676.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2417282187","pubTimestamp":1709693644,"sourceInfo":{"source_id":"seekingalpha_fund","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"da-kukThe iShares India 50 ETF (NASDAQ:INDY) is performing well, but has already come a long way in the last 12 months and is approaching the all-time high of $53.83. 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With two major drivers in focus - the election in May and the Reserve Bank of India shifting to a more dovish stance - the next few quarters could make or break the developing uptrend. The INDY INDY is a passively managed fund composed of India's largest 50 stocks. As per the prospectus: The Fund seeks to track the investment results of the Nifty 50 IndexTM (the “Underlying Index”), which measures the equity performance of the top 50 companies by free float market capitalization whose equity securities trade in the Indian securities markets, as determined by NSE Indices Ltd. The only other fund tracking the Nifty 50 is the First Trust India NIFTY 50 Equal Weight ETF (NFTY). As its name suggests, it is equal weighted (or nearly) and the top holding has a 2.59% weight. On the other hand, INDY's top 10, as shown below, is much more concentrated and the top 3 stocks make up nearly 30% of the fund.   INDY Top 10 Holdings (Seeking Alpha)This has advantages and disadvantages and INDY does carry concentration risk, especially in the financial sector.    INDY Holdings (Seeking Alpha)The risk may seem justifiable if INDY outperformed NFTY, but this is simply not the case, especially in the last year and the last three years. Data by YChartsUnfortunately, INDY is concentrated in some underperforming stocks and sectors, and the equal weighted diversification is a better strategy at this time. One other factor to consider is INDY is a much larger fund with $854M AUM compared to NFTY's $173M. Liquidity is much better in INDY with $4.13M Average Daily Dollar Volume compared to just $1.46M in NFTY. Most of the other details in the prospectus and fund page are standard for an ETF, but the 0.89% expense ratio is relatively high for a passively managed fund. A dividend yield of 0.46% (FWD) is unexceptional. Drivers The Election India is expected to go the polls between April and May this year. India’s Prime Minister Narendra Modi and his ruling Bharatiya Janata Party (BJP) led NDA alliance are up for re-election for a third five-year term. The main competitors, the I.N.D.I.A. alliance, is a coalition of 26 parties led by the Indian National Congress (INC) who were roundly defeated in the 2019 election. I am no expert on Indian politics, but I do know markets hate uncertainty. If the polls leading up to the election data are close, INDY is likely to underperform. However, given the scale of Modi's victory in 2019, and the polling trends shown below, it looks like NDA should win by a comfortable amount again.   2024 Election Polls (Wikipedia)A Modi victory would be neutral-to-positive for Indian stock markets as markets tend to prefer consistency, and they know what to expect from Modi from his ten years in power. It could well be \"better the devil you know\" for INDY. Reserve Bank of India For all the differences between India and the US, central bank policy is fairly similar in that the Reserve Bank of India are on \"pause\" after a large hiking cycle and cuts are expected this year, although not in any great hurry. There are six members of the Monetary Policy Committee (MPC). All six voted to keep rates at 6.5% in December, but in the February meeting one member voted to cut. INDY will be sensitive to any firm signal of a cut or, indeed, a hawkish shift towards a \"higher for longer\" approach to rates. The large run high from October 2023 is partly driven by the expectation of cuts, but with growth still very high, and inflation bouncing back from 4.9% in October to 5.7% in December, cuts may be pushed back till late in the year. I think the risks are skewed towards \"higher for longer\" rates and this may limit INDY's upside until late in the year as it approaches the major resistance of $53.81. Technical Analysis INDY has gained 29% in just under a year, but remains at lower highs and may be a bit stretched to convincingly break and hold above the all-time high of $53.81. A long consolidation just below this level could set up the break later this year.   INDY Daily Chart (Tradingview)I would prefer to either buy a dip near $48 or re-visit in a few months when the chart has set up a better opportunity to break out. Conclusions  INDY provides exposure to India's largest 50 companies. Its composition has led to underperformance compared to NFTY, and the expense ratio of 0.89% is unappealing. That said, there are several catalysts that could still drive a rally in 2024 and a swift resolution to the election accompanied by a full dovish shift by the Reserve Bank of India could set up a break to new all-time highs later this year.","kind":null,"is_publish_news":null,"is_publish_highlight":null,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.22.4","shortVersion":"4.22.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2417282187"}