Has the liquidity-driven outperformance of Indian shares among BRIC markets this year run its course? Some market participants argue that the reform optimism-led buying may give way to a technical correction.
The BSE Sensex rose 26.1% in 2012 as of Thursday’s close, outperforming all its peers among the BRIC nations.
Optimism around reform measures by the Indian government has been rewarded by foreign portfolio flows of $20.51 billion this year.
But on the flip side, equities have now started looking overbought to some based on technical analysis indicators, dealers say.
The Sensex is trading in the “overbought” territory, with its 14-day relative strength index above 70a for the sixth day.