Balanco believes that India will continue to be a key driver for emerging markets and, relative to the global benchmark, an outperforming market, one that investors should consider increasing their exposure to.
“The participation in the rally and the break back above the 50-day moving average is typically a strong historical signal. While there will be pullbacks along the way, we should now be buying the dips rather than selling into rallies, which has been the trend since September,” he said while speaking to CNBC-TV18 on Thursday, March 27.
Balanco mentioned that private banks and large NBFCs like Bajaj Finance are likely to lead the uptrend.
“We’ve seen breakouts in Kotak Mahindra Bank after being range-bound for the past two and a half years. HDFC has reasserted itself post-breakout, and ICICI Bank has traded back to its all-time high. This is a key focus area. Additionally, non-bank financials like Bajaj Finance have witnessed major multi-year trading range breakouts. That’s where the current interest and momentum lie in the Indian market,” he added.
The CLSA chartist expects Brent Crude prices to fall to levels of $50 per barrel. Brent Crude futures are currently trading near the $74 per barrel mark and that implies a potential downside of over 33% from those levels.
“Over the past 18 months, we have seen the $70 per barrel to $71 per barrel area be quite a key support area. But every rebound that we have had off that $70-71 per barrel support area over the past 18 months has met selling pressure as on every rebound,” he added.
Speaking about the US Dollar, he said that it has started to top out from a 14-year-long uptrend, after having corrected from the post Trump tariff tantrum high of over 110.
“If you take a step back and you look at the longer term charts, the dollar index has been in an uptrend since 2011 but this lower high that you have made in December relative to the September 2022 high, does give you an indication that dollar uptrend of the past 14 years is starting to top out,” he said.