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G-20 consensus set to bolster market sentiment

The $1.1-trillion boost to the IMF given by the G-20 group of the world’s elite economies, and a closer and stricter monitoring of tax havens are expected to boost investor sentiment and possibly drive up the benchmark Sensex on Monday, say market analysts, reports Sandeep Singh.

business Updated: Apr 03, 2009 23:23 IST
Sandeep Singh

The $1.1-trillion boost to the IMF given by the G-20 group of the world’s elite economies, and a closer and stricter monitoring of tax havens are expected to boost investor sentiment and possibly drive up the benchmark Sensex on Monday, say market analysts. But questions remain on the sustainability of the market revival.

“IMF being made more powerful and tax havens being regulated are positive and they will push the Indian markets up for sure in line with the global markets,” said Nilesh Shah, Deputy Managing director, ICICI Prudential AMC. “Regulation of tax havens will bring incremental cash flow into the system and some to the Indian markets too.”

The incremental money expected to flow into the system with little fears of its flight are expected to strengthen the markets.

The Dow Jones in US closed with a gain of 2.8 per cent on Thursday after the G-20 declaration came in. The Asian Markets closed in the green on Friday with mild gains. The European markets however were trading flat on Friday after having rallied on Thursday.

Indian stock exchanges were closed on Friday for Ramnavami. The Sensex had on Thursday jumped 447 points, or 4.5 per cent, to 10,348 points, as stocks in Asia and Europe gained tracking an overnight rise in share prices in the US. The S&P CNX Nifty touched 3,211, up 4.9 per cent.

While global factors may have improved, or at least provided traders and investors with a sense of stability, a lot might depend on the policies of the new government as markets look for measures to sustain domestic growth.

“While optimism is there in the system, the fundamentals will have to improve further to keep the movement sustainable,” said Sanjay Sinha, chief executive officer, DBS Cholamandalam AMC.

“It can be sustained only if we get a reform oriented government,” added Shah.