Last Weeks Market Review

Global : Equity markets gained closed higher on the back of positive economic data and expectations that monetary policies will remain conducive for growth; Gains were tempered to some extent by concerns around fiscal health of some European economies and signs of economic slowdown in the region; Indications of further quantitative easing by US Federal Reserve boosted treasuries and precious metals; the US dollar index continued to lose ground. Asian/ EM central banks announced measures to stem the rise in their currencies vis-à-vis the dollar.

India – Equity: Indian equity markets retained their positive streak helped by strong FII flows and frontline indices inched closer to all-time peaks, despite the profit booking; FII inflows aggregated $1.5 bln last week and for the calendar year to date have topped $17 bln. Corporate India’s growth continues to be robust and justifies the valuation premium the country enjoys over its peers.

India – Debt: Indian bond yields closed mixed with yields at the short-end moving up on liquidity tightness and those at the long-end easing in response to relaxation in FII investment limits; The rupee rallied on hopes the move could help in increasing capital inflows given the low rates in developed markets and boost the Balance of Payments situation; Govt announced a marginal cut in issuances for the second half.