This week the Indian stock markets shrugged off the Brexit, and rallied recovering all of the losses seen last week. Spectacular rally was led by buying from foreign funds, easily ignoring the Brexit worries.
US stock markets saw the best gain in 2016, with both the Dow Jones surging 3 per cent during the week, clocking their best gains of the year. Check world indices here
In India, the NSE hit a new 2016 high, making stocks a lot more expensive.
Stocks from all sectors rallied, except the IT sector, where there were worries that IT services and exports could be hit following the exit of Britain from the European Union.
Banking sector stocks, led by PSU banking shares rallied in trade and were the sector which recorded the highest gains. State Bank of India, Punjab National Bank and Bank of India were the major gainers.
A better than expected monsoon, an FDI push by the government all helped in perking sentiments. The rupee also recovered lost ground after breaching the 68 levels.
Going ahead there are not many cues, given that the Brexit is now behind us. Markets would look for fresh cues. It is possible that we might see further rally ahead.
Investors across the globe are getting very low yields from bonds and when that happens, there is very little choice, but to buy emerging market equities. This is what is fuelling the rally in stocks across the globe, including India.
We believe that in the short term of a month or so, we might continue to see a rally. At the current levels markets are looking stretched and investors should take minimum exposure.