Wall St rebound lifts up Asian markets, Nifty futures

Hong Kong: A dramatic turnaround in investor sentiment on Wall Street overnight is lifting up indices all across Asia this morning.

As at 7.30 am IST, Nifty futures are up in excess of 1.1 percent, in line with sentiment across the region, where indices are up fairly across the board.

There’s really no accounting for why the tide turned, but Wall Street was obviously overcompensating for last week’s sharp fall, and latched onto news of a new plan to address Europe’s debt crisis. Details are sparse, and in any case, this merely represents the triumph of hope over experience, but it was enough for fickle markets to ride it.

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Wall Street was also inspired by plans by China to stimulate its economy. Conservative analysts reckon that there are risks of China overdoing its economic stimulus, since the overhang from the stimulus of 2008 has still to work through the economy, but again markets are focussed only on the short term.

All three Wall Street indices finished with strong gains, but the Nasdaq outperformed to finished nearly 2.5 percent up.

Back home, the rupee’s breach of the 55-to-the-dollar mark has analysts fretting about further weakening, particularly since eurozone turmoil is only temporarily in retreat, and will return with a roar soon enough. Overnight, the dollar index finished marginally up; the rupee will likely open weaker today.

Yet, for all the bad news, there are signs that on the margins, foreign institutional investors see the Indian market as perhaps a bit oversold, and are tiptoeing back.

For today, we’ll likely see a fairly strong start to trading.