Wednesday, 24 June 2015

D-Street’s Good Days on the way back!!

After a sluggish start to the year, Dalal Street has regained its mojo with the 30 –share benchmark Sensex notching up an eight-day winning streak in early June as fears of a below par monsoon seem to have abated, while optimism over Greece and delayed  US monetary tightening hopes have boosted the lure of emerging market equities.

The Indian markets are relieved that the monsoon is currently on the right track encouraging rural demand and improving hopes of another round of rate cut by the Reserve Bank of India amid softening inflation.

Further, a global stock rally coupled with new reform proposal by Greece has raised the market’s expectations that a long-awaited deal between debt-burdened Greece and its creditors is firmly taking shape, putting an end to the five-month long deadlock and averting a dreaded breakup of the 19-member Euro.

The Indian markets have another reason to cheer as Fed signaled a dovish stance at its June meet indicating that the pace of rate hikes would be gradual. Fed's new interest rate stance would reduce the outflow of funds from Indian markets and thus maintain liquidity in the Indian markets. This will also limit the US dollar's surge against the Indian rupee, thereby improving India's risk-reward ratio among emerging markets.

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