India’s Stock Market Poised for Strong Finish to 2025
While Indian equities have significantly underperformed their U.S. counterparts this year, technical analysis suggests a potential reversal is underway. The iShares MSCI India ETF (INDA), which has delivered a modest 3.44% year-to-date return, appears to be breaking out of a prolonged corrective phase that has persisted for over a year.
According to technical analyst Katie Stockton of Fairlead Strategies, INDA has been forming a triangle pattern with converging highs and lows on the chart. “We always pay attention when triangles form because we find that triangle breakouts often see strong upside follow-through,” Stockton noted. The ETF recently moved above the upper boundary of this triangle near $54.50, setting up a potential confirmed breakout that requires two consecutive weekly closes above this level.
Technical Indicators Support Bullish Outlook
The potential breakout coincides with several positive technical developments. A weekly MACD “buy” signal has emerged, targeting final resistance near $59.50 if the breakout confirms. Intermediate-term overbought conditions aren’t currently a concern, which is typical during triangle breakouts according to historical patterns.
Short-term momentum has also turned positive, with INDA clearing resistance from the daily cloud model. This bullish short-term catalyst increases the likelihood that the ETF can sustain its move away from long-term triangle resistance in the coming weeks. The near-term upside objective sits around $55.90, matching the June peak level.
Relative Strength Against S&P 500 Improves
Perhaps more significant for international investors is the improving relative strength of Indian equities compared to U.S. markets. The ratio of INDA to the S&P 500 Index recently confirmed an intermediate-term counter-trend ‘buy’ signal from Tom DeMark’s TD Combo® model.
Stockton highlighted that “the previous signal of this nature in late February was timely, preceding a strong phase of outperformance lasting a couple months.” The current signal suggests potential outperformance relative to the SPX for approximately eight weeks, providing a window for enhanced returns compared to U.S. equities.
Risk Management Considerations
For investors considering long positions in INDA, Stockton emphasizes the importance of monitoring the ETF’s relationship to its 200-day moving average for risk management purposes. “The triangle would be jeopardized below that level,” she cautioned, suggesting that maintaining position above this key technical level is crucial for the bullish thesis to remain intact.
The current technical setup comes at a time when global investors are evaluating emerging market opportunities amid shifting economic policies and geopolitical developments. Indian equities, which demonstrated resilience following the 2020 global equity correction, may be regaining favor as technical patterns align with fundamental growth prospects.
Broader Market Context
The potential resurgence in Indian equities occurs alongside significant technology sector transformations and infrastructure developments that could further support market performance. As companies worldwide adapt their digital strategies, including recent streamlining initiatives by major tech firms, emerging markets like India stand to benefit from increased foreign investment and technology transfer.
Meanwhile, critical examination of cloud infrastructure reliability highlights the importance of diversified technological ecosystems, potentially creating opportunities for Indian tech companies to capture market share as global enterprises seek redundancy solutions.
While technical analysis provides valuable insights into market timing and potential price movements, investors should consider these signals within the context of their overall investment strategy and risk tolerance. The convergence of positive technical indicators for Indian equities, combined with the country’s strong long-term growth narrative, suggests that current market conditions warrant close attention from global investors seeking emerging market exposure.
This article aggregates information from publicly available sources. All trademarks and copyrights belong to their respective owners.
Note: Featured image is for illustrative purposes only and does not represent any specific product, service, or entity mentioned in this article.