Indian markets dancing to global tunes

The S&P BSE Sensex surged by 210 points, up by 0.85 per cent in early trade on Wednesday, overlooking the negatives emanating out of the weak IIP and CPI numbers released late evening on Tuesday.

Indian markets have come under heavy selling pressure amidst the backdrop of Chinese stock market collapse and a sharp decline witnessed in crude oil, which has corrected over more than 10 per cent since the start of the calendar year 2016. It was widely expected that the Indian markets would open with a negative bias given the below expected IIP and CPI numbers, which were released late evening. Indian benchmark indices bucked the trend despite poor domestic economic indicators.

Indian markets were in green taking cue from the positive global equity markets, especially the US and Chinese markets. US stocks snapped the 8 day losing streak, and closed the day with solid gains. The S&P 500 closed with the gains of 15.01 points, or 0.8 per cent, with 8 of its 10 main sectors finishing in positive territory. The Dow Jones Industrial Average gained 117.65 points, or 0.7 per cent. Meanwhile, the Nasdaq Composite ended the day up 47.93 points, or 1 per cent, snapping an 8-day crash. The reason for the rise was attributed to bargain purchase of stocks.

The markets were also assisted by a sharp rise in crude oil prices owing to US crude stocks unexpected decline. US crude stocks fell by 3.9 million barrels during the week to a low of 480.071 million, compared with analysts' expectations for an increase of 2.5 million barrels, according to the data from industry group showed on Tuesday. In a further bullish sign for oil, Chinese crude imports rose by more than 21 percent in December as compared to November, according to official data released on Wednesday.

Asian markets were also cheered by the Chinese trade data that was better than the one anticipated by the investor community. China reported its exports had risen 2.3 percent in Yuan-denominated terms in December, since the past one year; while imports dipped 4.0 per cent. Buoyant by the positive news on trade data Shanghai Composite Index was up 0.8 per cent and the CSI300 index was up 0.9 per cent. The hint of firmer demand from China provided a relief for commodity prices, which have been under tremendous pressure for months together. The unexpected data suggested that exports may be getting a boost from China's decision to allow a sharp slide in the value of the Yuan currency late last year, which has continued into early 2016.

All the major Asian markets were trading with gains ranging from 0.5 to 3 per cent. Japan's Nikkei jumped 2.6 percent; Australian stocks gained 1.3 percent etc. Shares in Southeast Asia were also trading higher.

According to the market experts and major brokerage houses, the markets are going to behave in tandem with the global markets for the coming months. The domestic markets are going to remain volatile on account of the transient effect of weak global growth, and the slowing down Chinese economy would play a major role. Markets across the region would not be driven by country specific issues, with the exception of Chinese happenings.