Indian Banks Perking my Interest from a Technical Viewpoint

We haven't owned the Indian banks in a long while but both ICICI (IBN) and HDFC (HBN) are looking a lot better technically of late. If you read my piece this weekend [New York Times - How India Avoided the Crisis] on how India did some out of this world stuff like "regulate" you will see why I don't believe in the "U.S. shall lead them" thesis of recovery. A handful of countries in this world have destroyed their financial systems, and are facing a deep recession. The other countries are just facing a deep recession. Which do you believe is easier to recover from? In the U.S. it appears to be group think to believe its the former... which makes little rational sense. Its a narcissistic view in my opinion. But that's belief in the power of the "government" to solve all ills.

In the Asian banks we don't have these ludicrous capital destruction situations since they are still old school and don't have political dogma that says regulation is the bane of all evil. Now, I am not saying they will have an easy road either since the globe is interconnected, and weakness in the biggest spender on the planet (us) is affecting everyone but it's all about relative degrees of bad situations. India is also interesting to me because it's less reliant on exports than China or Brazil. So it could be the sleeper market of 2009 - at least of the former BRIC countries.

One issue with India is the almost complete lack of individual companies for Americans to buy, so over the years I've usually gone with the 2 banks when I want to go long India. (there was a closed end fund that I also used for years but some new ETNs have since arrived on the scene)

With HDB, you see a thus far successful retrace to the 50 day moving average ($65) and now a bounce today. There are two key levels here, $75 which is a "double top" (early Nov/mid Dec) - a move north of that would be very bullish and of course clearing the 200 day moving average ($79s) would be extremely constructive. So an aggressive buyer could buy on pullbacks to mid $60s with parachute ready to deploy if $63 or so breaks. A conservative investor would wait to see either $75 cleared or even better the 200 day moving average cleared.

The picture is a lot easier on IBN since the stock has been much weaker over time and is much farther below the 200 day moving average. We have the identical "multiple" top situation at $20. A close above it, and it should be off to the races. Support is around $18 and stop loss $17 or lower would be my play here.

Fundamentally I prefer HDFC to ICICI in terms of business model, but this is not a market of fundamentals.

The general country ETFs for India are not quite so constructive - the strength seems concentrated in the financials. At some point in 2009 I'll also be looking to re-enter the ETFs for Signapore, Hong Kong and the like. But the charts have yet to indicate its time.

No positions, but stalking