Ukraine Relief Boosts Global Equities

The Indian equity markets yesterday displayed a strong resilience and witnessed a good up-move.  This northwards movement helped the Indices recover for the losses occurred in the preceding trading session. The noticeable factor was, the Indian equities traded higher despite the global equity indices witnessing pressure on account of tiff between the Ukraine and Russia. It was the rally in the Banking, Auto and most surprisingly metal stocks that helped the indices move northwards.

And if we consider the situation today, we feel the Indian equity markets are poised for another up-move. As per the Bloomberg report the Asian stocks rose, with the regional indices posting its biggest one-day gains in more than a week, after global equities rebounded and China kept its growth target unchanged. Apart from that the Silver and emerging-market currencies climbed as better-than-estimated economic data lifted Australia’s dollar.

While these are the factors that have helped the Indices recover, we feel the biggest Factor helping the global equity indices is relief on the front of Ukraine and Russia. It was no wonder that the US equities also witnessed a strong up-move. While the Dow closed at 16395 (up 1.39 %) the S&P closed up by 1.50%. There was an additional factor for the US markets.  The expected budget from US President predicts a strongest growth for the Us Economy since 2005. As per the Bloomberg reports, the Gross domestic product of USA will expand 3.1 percent in 2014 after rising 1.9 percent last year, the administration said in forecasts accompanying its 2015 budget plan. The jobless rate will average 6.9 percent this year, compared with 7.4 percent last year, and average 6.4 percent in 2015, according to estimates based on information as of mid-November. This is a biggest positive for the Global equities. As regards the impact of the same, we are of the opinion that the improvement in the US markets bodes well for the Indian markets and hence expect a positive impact on the Indian Equity Indices.

As for the performance of Asian peers, as mentioned earlier the Asian equity Indices are also trading with significant gains. Nikkei is trading up with gains of 1.40% and Hang Seng is also up 0.23%. Only Shanghai Composite is trading with miniscule losses as the Index is down 0.12% down.

The SGX Nifty is trading with gains of 36 points, showing an appreciation of 0.60%. We are of the opinion that the Indian markets are expected to continue the upward momentum gathered yesterday. There is a possibility of indices opening gap up. However, if the markets open gap-up, the first hour of trade would be range bound.