GLOBAL MARKETS

Global Markets Update for March 16, 2011:

                                                                                                         

• In line with expectations, the FOMC moved to a more upbeat tone in characterizing the recovery but left the asset purchase program unchanged. Federal Reserve policy makers said US growth is becoming more durable and higher energy prices will have a temporary effect on inflation as they affirmed plans to buy $600 billion of Treasuries through June.

• Portugal’s debt rating was cut by Moody’s Investors Service, which cited a weaker outlook for economic growth, risks to the government’s deficit- reduction plans and a possible need to recapitalize banks. The rating was downgraded to A3, four steps from so-called junk status, with the outlook on the grade “negative.”

• South Korea’s unemployment rate rose to a one-year high in February as jobs in farms, hotels, restaurants, and the retail & wholesale sectors declined. The jobless rate rose to 4.0% from 3.6% in January.

• The index of confidence among US homebuilders increased to 17 in March as compared to 16 a month ago, to record the highest level since May 2010 as more firms anticipated stronger sales in the next six months, a sign the housing market is stabilizing.

• The Hong Kong Monetary Authority kept its base rate at 0.50% this morning.

• Troops loyal to Col. Moammar Gadhafi seized the strategically important town of Ajdabiya, opening the way to a direct attack on the rebel capital of Banghazi as Western leaders fail to reach an agreement to set up a no-fly zone.

• Indian stock markets opened weak yesterday as increasing nuclear hazards in Japan weighed on investor confidence. The indices  recouped some losses in the afternoon session led by a 1.8% rise in index heavyweight RIL as the company’s advance tax payment rose 37% YoY in this quarter. However, a sharp fall in global stock markets owing to the natural crisis in Japan, kept investors cautious, which saw the indices end on a negative note. All the sectoral indices ended down with realty, power & auto sectors being the main laggards.

• Overnight, the US stocks pared losses by the end of the day's trade after falling to 6-week lows. The Fed's decision of continuing its bond buying programme through June helped negate US market jitters even as other markets succumbed.

• Today, Asian markets climbed for the first time in five days after UBS AG & Nomura Holdings Inc. said equities were “oversold” following Japan’s record earthquake & as valuations on the Nikkei 225 Stock Average sank to a 28-month low which rallied more than 6% today after the worst two-day selloff since the 1987 crash on speculation the selloff was excessive even as the country battles to prevent a nuclear disaster after its strongest earthquake. Indian shares climbed more than 1% in early trade, tracking small gains in their Asian peers. Energy major Reliance Industries & financial stocks led the rise. The equities benchmarks bounced back sharply on the back of short covering as shorts were built up yesterday amid weak global cues. Recovery in global markets & especially in Japanese shares too led the support as it seems that sentimental effect due to massive 8.9 magnitude quake, tsunami & blasts in nuclear reactors eased for the time being.