>Trade Winds MARCH 23, 2009 (KARVY)

Global stock markets rallied sharply during the week due to the stimulus packages announced by various governments across the globe. The recent announcement by the US Federal Reserve on buyback of securities to the tune of US$300 billion led to a sharp rally in the global stock markets and the Bank of Japan announced that it would buy bonds from commercial banks to spur lending.
In the US markets, jobless claims have declined for the fi rst time, whereas unemployment levels reached all-time levels in the UK. Global commodity markets traded on a strong note during the week, with crude oil prices gaining around 12% and other base metal prices trading firm.

Asian markets traded firm during the week, with the Japanese Nikkei gaining around 10% and the Chinese Shanghai Composite rallying around 7%. The domestic stock markets extended their gains, with the Nifty adding 3.23% and the Sensex gaining 2.4% during the week. The markets displayed strength during the week’s trade, with stocks from sectors like energy, BFSI, construction and metals trading fi rm. However, markets witnessed profi t booking at every rise towards the upper end of the 2700-2900 band, although it traded firm on the back of increased trading volumes. The Nifty is expected to trade in a tight 2700-2900 range until expiry of the March series.

The week was marked by a historic event when infl ation came in at a low of 0.44% as of March 7 against 2.43% recorded the week earlier. Clearly, this low infl ation level can be attributed to the high base effect considering that this is a year-on-year indicator. The markets are expected to enter the negative infl ation zone (read defl ation), technically speaking, over the next couple of weeks as the full impact of the commodity price declines seep in. Meanwhile, in an interesting development, SEBI has sought opinions on the extension of trading hours, which could provide a good opportunity for traders in the long term.

To see full report: TRADE WINDS 230309