After being panicky for a while that saw the bears pulling down the stock prices worldwide, some respite finally seem to have arrived with the stock indices having stabilized after a series of rollercoaster rides. Some believe that the measures taken to bail out Bear Stearns and the expansion of the collateral acceptable to the US Federal Reserve to include mortgage-backed securities have helped to restore investors’ confidence in the equity market. The Dow Jones Industrial Average rose by 8.2 percent from its position on 17 March. The Morgan Stanley Capital International or MSCI World index witnessed 8.9 percent increase.

The MSCI Emerging market index is up by 15 percent and the MSCI EM Asia index has risen by 10 percent since 17 March. Unfortunately, the Indian market has not performed according to the expectations of the investors. The MSCI India index rose by a mere 3.4 percent since March 17. Despite of the Sensex closing at 15,405.54 points on April 7 gaining 62 points from the previous day, it is far behind the 20,000 mark it nearly touched in the end of 2007. For long analysts had said that the Indian stocks were overvalued and the bull run was not a true reflection of their correct valuation.

The rise in the equity prices is also being limited by the rising inflation and the fear of dampening economic growth. According to Subramanyam Pisupathi, research head, Ventura Securities, the Indian market has become clueless and directionless. It has become a trader’s market with people selling at every rise. Investors are keeping a close watch on the rising inflation and government’s efforts in tackling the menace.

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Source: Live Mint