What propelled the European and US markets was the US jobs data, which suggested that the US economy may head for a gradual recovery and not slip back into recession. Non-farm payrolls grew by 163,000 jobs in July, according to the US Labor Department, far above the 100,000 expected by analysts. The data saw feverish buying in stocks in Europe and the US.

In fact, analysts believe that the better than expected non-farm payrolls may not stop the Federal Reserve from quantitative easing in September.

The US jobs data is likely to see Asian stocks including Indian markets rallying next week. How far the rally would last would depend on newsflows, particularly domestic.

Marketmen are worried that the government has not initiated big bang reforms and only a global rally might not help Indian stocks. A host of reforms particularly with regards to FDI in multi-brand retail and increase in diesel hikes remains. In fact, fresh worries over drought, has seen funds hold back on purchases. The concern now is that the drought like situation would reduce rural spending and lower the GDP growth forecasts. Deputy Chairman of the Planning Commission Montek Singh Ahluwalia
has already hinted that GDP growth could come down to 6%.

Clearly, Indian markets are likely to react positively on Monday in line with global markets, but how far the rally will sustain depends on reforms and government initiatives.

GoodReturns.in