Local market may rally today, led by strong global cues. Union Bank of Singapore (UBS) sparked a rally yesterday, 1 April 2008, in Europe market on expectations that financial firms will recover from its $ 232 billion in mortgage-related losses. US markets rallied yesterday, 1 April 2008, after Lehman Brothers indicated that the bank can weather further credit losses. Asian markets were trading higher today, 2 April 2008.
Asian markets were trading higher today, 2 April 2008. Japan's Nikkei (up 3.34% at 13,079.11), Hang Seng (up 3.74% at 24,001.97), Taiwan's Taiwan Weighted (up 1.73% at 8,565.42), Singapore's Straits Times (up 2.38% at 3,119.20) and South Korea's Seoul Composite (up 2.13% at 1,738.44), edged higher.
US markets rallied yesterday, 1 April 2008, after Lehman Brothers indicated that the bank can weather further credit losses. Better-than-expected reading on the manufacturing sector also fueled gains. The ISM reported that its purchasing manager's index rose unexpectedly to 48.6 in March 2008 as compared to 48.3 in February 2008. The Dow Jones industrial average jumped 391 points to 12,654. The Nasdaq Composite index surged 84 points at 2,363 while the S&P 500 gained 47 points to 1,370.
However, the sharp rise in inflation has been a cause of concern, which has now risen above the Reserve Bank of India's caution limit of 5%. India's wholesale price index surged to 13-month to 6.68% in the 12 months to 15 March 2008, surging from the previous week's rise of 5.92%, government data showed on Friday, 28 March 2008.
Finance minister P Chidambaram yesterday, 31 March 2008 announced a slew of measures, in an attempt to rein in commodity prices. The measures announced by Chidambaram include a total ban on non-basmati rice exports, a reduction in import duty on edible oils, allowing states to impose stock limits with traders, and also warning the steel lobby to hold the priceline, no matter the consequences.
The market sentiment may remain edgy in near term as Indian companies are sitting on huge losses on account of the forex derivative transactions they undertook last year. A steep decline in the value of the US dollar against the Japanese Yen and the Swiss Franc has hit Indian corporates which have used these two currencies (Yen and Franc) extensively to swap their rupee denominated debt.
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