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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