India presents a solid investment opportunity given China's downturn, according to William O'Neil's Dean Kim

 India presents a solid investment opportunity given China's downturn, according to William O'Neil's Dean Kim

Kim said he's seen a spike in midcap equities, particularly in the Indian banking industry. But there's still some ground to cross for large-cap bank equities, particularly private ones, he said.

Since China is continuing in a downward trend, William O'Neil + Co.'s Dean Kim thinks that India can be a potential investment opportunity. But Kim said in an interview with CNBC-TV18 that the Indian market has to get better since the equities have plateaued around the 200-DMA (daily moving average), and the barrier is now at the 100-DMA.

He blamed the bad US market circumstances for the decline in the Indian market, but now that the US market is improving, he thinks there should be greater interest in developing countries, especially India.

NYSE Is Getting Stronger

Kim also spoke on the recent Wall Street rise, pointing out that the Nasdaq and S&P 500 had both broken over barrier. Many equities are doing well, especially midcap and IT stocks. Two weeks ago, just 18% of stocks traded over their 150-DMA, severely damaging the market breadth. Today, 21% of equities are trading above the level.

"There could be one more rate increase in December, but things are tight financially right now with the US 10-year bond yield approaching the 5% mark and US mortgage rates around 8%. It would make sense if the Federal Reserve stuck on its current trajectory and decided not to increase interest rates," he said.

Small and Mid Caps Shine

Kim said he's seen a spike in midcap equities, particularly in the Indian banking industry. Certain consumer finance organizations are doing very well, like CreditAccess Grameen, IndusInd Bank, L&T Finance, and Equitas Small Finance Bank. Big-cap bank equities, particularly private ones, still have some ground to cover, however.

Kim made it clear that nationalized institutions like Punjab National Bank will remain a priority for him. Additionally, small- and mid-cap tech stocks now seem to be promising.

As they are emerging from an early-stage basis, he predicted that scrips like Dixon Tech, Persistent Systems, and Sonata Software may do well.

Kim did point out that TCS and Infosys, two of the bigger IT businesses, still have a ways to go and may not beat the market until more stabilization occurs in the US.