India To Fetch Global Liquidity Created By Ecb’s Quantitative Easing

On January 22, the European Central Bank (ECB) launched quantitative easing program to pump in 1.1 trillion Euros in the economy until September 2016. ECB has announced its much anticipated quantitative easing program after a wait of a month. The ECB is intend to buy 60 billion Euros of securities including sovereign bonds, asset backed securities and other public and private debt instruments starting March 2015. The program will continue till September 2016, aggregating 1.1 trillion Euros. Further, the ECB also announced that the program could be extended if the inflation does not reach ECB’s 2 per cent target.

This stimulus measures were primarily in line with the market expectations to prevent the Euro economy from falling into a deflationary stage. During last couple of weeks, the European markets showed good up move with DAX and CAC 40 gaining more than 8 per cent. This move will definitely boost European equities outperformance against US market. The 2015 will be full of ample of global liquidity helping equity markets to further reach new highs. However, near term risks such as general election in Greece are expected create volatility across the global markets.

The European quantitative easing will lead bullishness across all global markets. The emerging markets will be the benefit most from the increased global liquidity. India being at one of the most favored emerging market amongst others will experience good amount of foreign money flow in the economy. On the back of promises made by government and improving macroeconomic situations and corporate earnings, domestic equity market are likely to see good traction in days ahead.