Expectations from central banks rise

The world’s leading markets galloped on increasing speculation about some sort of easing from the FOMC and other central banks. Life... It tends to respond to our outlook, to shape itself to meet our expectations - DeVos. Well, Indian stocks had been rising in the run-up to the RBI policy on hope of monetary easing in order to support growth. Now, world markets are upbeat about more stimulus coming their way from the Federal Reserve later on Wednesday. Investors are also betting on monetary easing from ECB, Bank of England, Bank of Japan and even China’s central bank. It is anybody’s guess which of the central banks will blink first, if at all they will. One problem with keeping high expectations is the risk of some of them not being met. So, while the global economic conditions do merit urgent policy action, it ought to come from the fiscal side and not from the monetary side. The start is going to be a positive one as the world’s leading markets galloped on increasing speculation about some sort of easing from the FOMC and other central banks. Ride the global wave while it lasts, but don’t lose sight of the headwinds confronting us. Cement stocks could be under pressure following the CCI report on cartelisation. India Equity Funds enjoyed their best week since mid-February in the week ended June 13, as cheap valuations and a weak rupee attracted foreign investors, according to global funds flow tracker EPFR Global. A combination of attractive valuations, the minimal returns offered by "safe haven" assets and predictions of more quantitative easing (QE) in the US and Europe drew investors back into Emerging Markets Equity Funds as the second week of June progressed. Global Emerging Markets (GEM) Equity Funds group took in over $1.2bn, its biggest inflow since the first week of March. However, EMEA and Asia ex-Japan Equity Funds recorded outflows. Funds with European mandates were shunned during the second week of June. EPFR Global-tracked Europe Bond Funds experienced their biggest weekly redemptions since early December and Europe Equity Funds posted outflows for the tenth time in the past 12 weeks. However, global equity portfolio managers marginally increased their allocations to Europe at the end of April after holding portfolio positions flat in Q1. Overall, EPFR Global-tracked Equity Funds absorbed $10.91bn during the week ending June 13 - a 62 week high - with US Equity Funds accounting for over three-quarters of that total while Bond Funds took in a net $1.46bn. Money Market Funds saw net redemptions of $11bn. Trend in FII flows: The FIIs were net sellers of Rs. 933mn in the cash segment on Tuesday while the domestic institutional investors (DIIs) were net sellers of Rs. 2.78bn, as per the provisional figures released by the NSE. The FIIs were net buyers of Rs. 4.98bn in the F&O segment on Tuesday, according to the provisional NSE data. The foreign funds were net sellers of Rs. 5.92bn in the cash segment on Monday and Mutual Funds were net sellers of Rs. 383mn on the same day, according to the SEBI figures. Global Data Watch today: BOJ monetary policy minutes, Japan merchandise trade balance, Conference Board Australia Leading Index (Apr), Australia Westpac Leading Index (Apr), Australia Dwelling Unit Starts (Q1), Japan All Industry Activity Index (Apr), Germany Producer Price Index (May), UK BOE Minutes, UK ILO Unemployment Rate (Jun), UK Average Earnings (Jun), UK BOE Quarterly Bulletin (Q2), US Fed Interest Rate Decision, US Fed’s Monetary Policy Statement and Ben Bernanke's Press Conference.