The longest election campaign in India’s history has had a ho-hum impact on the local equity markets. However, speculation that one of the candidates, Narendra Modi, Gujarat state’s chief minister, might win boosted some state-based companies. Enjoy the ride, as profit taking could diminish optimism at election time.
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Speculation that Modi will become prime minister vaulted Gujarat-based companies nicely! The CNX Nifty Index (.NSEI) has yielded a respectable 8% so far this year. Meanwhile, a few companies from Gujarat really took off, with Adani Enterprises (ADEL.NS) surging nearly 68%! Also of interest is Arvind (ARVN.NS) — it’s up approximately 38%.
Campaign winding down
The campaign ends May 12. Regardless of whether Mori wins, splits victory or loses, odds are good that some degree of profit taking will hit the high fliers.
For instance, Adani Enterprises surged this year, recovering half of the losses suffered between July 2011 and September 2013. It’s now stuck around the 50% retracement at 440. Good support us at 371. The stock is trading well above the 21-week exponential moving average. For as long as this rising line holds, the medium-term uptrend remains in good shape.
Watch the average
Only a close below this average would take the fire out of the Adani Enterprises stock.
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