The Sensex and the Nifty breached their previous high levels to touch new life time highs yesterday. With a 287 point surge the Sensex closed at 26391, while the Nifty added 83 points to close at 7874 points. After an insipid result season, where nothing much was achieved by corporate India that could set off another round of buying, the markets have been looking quite wobbly, thanks to the shaky geopolitical situation.

It is the receding of these geopolitical fears that helped change the sentiment yesterday. Talks between Ukraine and Russia making some positive headway were big news for the markets yesterday. With a large part of the world in the throes of a war like situation, this comes as a much needed breather on the geopolitical front.

Russia being embroiled in such a brawl, has boded well for the Indian markets to some extent. A substantial part of the FII money, which could have otherwise found its way to the Russian markets has possible come to India in order to avoid the risk associated with the tensions brewing in that part of the world.

But, in a deviation of sorts from the general trend where the FIIs have been driving the Indian markets up, the Domestic Institutional Investors (DIIs) (read Mutual Funds) have been reportedly seen to become active now. Well, that really means business. The next round of big buying coming from this vital segment of the markets means, retail money is now getting active.

All the while that this market has been hitting newer highs, a lot of debate had been raging on when would retail investors advantage from this Bull Run? According to latest statistics, Mutual Funds have pumped in more than twice as much as the money that FIIs have put into the market over the recent past.  This suggests that the trend is finally changing with retail money now finding its way to the stock market.

According to reports, SEBI data shows, Mutual Funds having invested more than Rs 5400 crore in Indian equities against nearly Rs 2700 crore put in by the FIIs since July 24 (when the benchmarks had hit their previous high levels). That settles one important question of whether liquidity should be of any concern to the markets going forward. With retail money now entering the markets via the Mutual Fund route, liquidity would be the last of the concerns for the markets. The momentum that that this retail liquidity can provide to a market which is already in a strongly positive frame of mind is immense. The next round of the Bull Run is quite clearly going to be funded by this retail surge of interest in the markets.

Meanwhile, US markets did very well to open the week on a strongly positive note yesterday. The receding geopolitical tension between Russia and Ukraine gives the US some more legroom to concentrate on the Iraq crisis. Markets in the US responded quite positively to this. At close of trading, the Dow was up more than 1%, while the S&P 500 recorded a 0.85% rise over its preceding close. The Nasdaq closed the day with a 0.97% rise. The European markets too followed almost on similar lines to end the day positively.

Asian markets are seeking direction from the overall global cues emerging from the West this morning. The entire Asian pack seems to be carrying the positive sentiment with it. Benchmark indices across the region are up an average 1% as of now. The Japanese Nikkei is up 0.97%, while the Shanghai Composite is just about beginning to find its way up. Singapore is up a quarter percent followed by Korea, Taiwan, Indonesia and Hong Kong.

There is a perceptible change in the sentiment. Russia and Ukraine may not have resolved their differences yet, but the progress made on the front is being seen a big sentiment booster for the markets. The emergence of Mutual Funds as the propelling force for the Indian markets certainly spells better momentum as we get ready for the next big round of rise for the benchmarks. There is nothing that suggests a break at this point in time. The rise seen yesterday is likely to be followed up by another good day of trading as we head in search of the next higher level on the benchmarks.