Konnichiwa, India!

S&P Nifty India joins the party….

 In the previous post, I had mentioned that how the Superheroes (Heads of various Central Banks around the World) had saved the financial markets from a severe liquidity crunch. This liquidity combined with near zero interest rates, have propelled this fund flow towards better yielding assets – mainly the Emerging Markets.

With the S&P rising nearly 24% in the past 11 months, on the subdued American recovery coupled with higher hopes of continued QE till the end of the year, and with Japan joining the “QE club”, we now have the Equity markets around the world scaling new peaks.  We have the DJIA, which closed 30pts shy of the 15000 mark, we have Nikkei which has gained almost 50% since the September`2012, and we have the European Stock Indices which have gained nearly 20%-30% over a similar tenure.

And as the liquidity wave approaches Asia, we now see the Asian markets like Thailand, Indonesia, Philippines and India being the major beneficiaries.  The Indian growth story, which seemed to be stung in Q3`2012, has seemingly found takers, and how!  With the Government back into action, cooling inflation, falling interest rate cycle, and cooling commodity prices, FIIs have pumped in nearly $8.5bn in the first quarter of the year. This gush of funds has been mainly buoyed the Stock Indices which has seen a strong run up to 5850 levels after correcting to 5500 in the previous month on the back of aggressive monetary easing by RBI.

 

A closer look of the chart would show Nifty trading with a bullish channel, and all possibilities of scaling the coveted 6200 mark. The propulsion of the positive events of the near term along with the global liquidity theme into play would help us test the 6150 – 6200 range, which would be a good opportunity to buy Nifty in the short term. So, the adage “Sell in May...” may not come to fore this summer.

Happy Investing!!!