There is big news from India that warrants long-term investor’s attention. Presentation of the budget to the Parliament is often the biggest economic news of the year in India. Finance Minister Arun Jaitley just presented the budget for the next year. The story here is that unlike most other countries in the world, Prime Minister Modi has foregone the temptation to do heavy deficit spending to generate growth and popularity. Combine this with a potential long-term bottom on a technical basis in the India Earnings Fund ETF EPI, and you have a great setup for investors.
For Modi, I say kudos, as he is sticking with the financial discipline to narrow fiscal deficit to 3.5% of GDP during the next fiscal year, it is 3.95% in the present fiscal year.
For the long-term, fiscal discipline is going to do India some good. The fiscal discipline of Modi also opens the door for the Reserve Bank of India to lower interest rates. Lower interest rates will stimulate growth just like increased deficit spending would have done, but without the negative long-term consequences of taking on more debit.
The technicals look great
Let also look at the technicals, and why India matters. The chart of India Earnings Fund shows a divergence in the relative-strength index (RSI).
An RSI divergence after a prolonged decline is often the hallmark of a bottom…Read more at MarketWatch
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