Indian shares performed the best in Asia,after French President Nicholas Sarkozy and German Chancellor Angela Merkel promised a solution to recapitalise teetering European banks,and avoid a full-blown sovereign crisis in Europe.
Stocks rallied across the board on hopes that there could be a solution to the global financial crisis,but the optimism was tempered by the fact that it is more than 18 months that the Greece issue was yet to be resolved despite assurances.
We cant expect a sustainable recovery until some strong signals of the current euro crisis getting resolved are visible in the market, said Devesh Kumar,MD and head of equities at Royal Bank of Scotland.
The Sensex,after early weakness,bounced to a high of 16,596,before closing 2% higher at 16,557,led by beaten-down realty shares such as DLF.BSEs Realty index gained 3.2%,followed by IT at 2.9% and Consumer Durable index at 2.8%,respectively.
The US market too gave a thumbs up to the European deal and climbed almost 3% in early trade.Sarkozy and Merkel will deliver a plan to recapitalise European banks and address the Greek debt crisis by November 3.Belgium will free up failing lender Dexia and provide security for depositors.
In the US,the futures market rose further.S&P 500 Futures rose over 1% and the MSCI Emerging Markets Index too was up at least 0.5%.Global risk aversion is at its peak as reflected in the record low yields on US treasuries and peak withdrawals by US investors,says Krishna Kumar Karwa,MD at Emkay Global Financial Services.
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