Nifty futures, Asian indices surge on giant Wall St rally

Hong Kong: Markets around the world are on Red Bull: a temporary rush of energy driven by hopes of yet more monetary easing by the US Federal Reserve Board in response to generally weak economic data at home - and all around the world.

Yesterday’s market rally in India and across Asia went all the way around the world - and is feeding another burst of big gains today. As at 7.30 am IST, Nifty futures are up over 1. 5 percent, past the 5050 mark. Coming on top of yesterday’s surge, that’s pretty strong stuff.

Elsewhere across the Asia too, the momentum from yesterday is being sustained. Hong Kong’s Hang Seng index is up nearly 1.6 percent, and Sydney by 1.3 percent, but the mood every where is merry.

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Overnight, Wall Street had its best day of the year so far, with all three leading indices finishing up in excess of 2.3 percent. Much of it was driven by the expectation that the US Fed will open up the liquidity taps - which the markets so love - later this month. The US Fed’s Beige Book still shows economic expansion in the US, but comments from officials that the agency is standing by to spur the recovery provided a steroid boost for the markets.

News out of Europe overnight was also curiously calm, considering the gravity of the problems there. The European Central Bank didn’t budge on interest rates, but markets rode higher on the misplaced hope that “something would turn up”.

Back home, markets are banking on one more booster dose: an interest rate cut on 18 June. Yesterday’s meeting of key ministers also showed a government keen to address the perception of policy paralysis. Infrastructure-related stocks did particularly well, even in the absence of specifics on the policy announcements.

Expectations of US monetary easing signal a weaker US dollar, which - coupled with the risk-on trade -should see support for the rupee, and in turn propel investor sentiment as well. Morgan Stanley’s analyst says he sees a 10-15 percent upside for India in US dollar terms.

Overall, we’re likely to see strong gains at the start of trade today, and a marginally strong rupee.