| LONDON, March 7
LONDON, March 7 Indian shares rallied to record
highs on Friday on hopes of a market-friendly outcome to
upcoming elections, leading broader emerging equities to
six-week highs ahead of key U.S. jobs data.
Investors are awaiting the U.S. payrolls numbers that could
provide clues about the pace at which the U.S. Federal Reserve
reduces monthly bond-buying. But there was some relaxation in
recent market tensions over Ukraine, where many had feared the
outbreak of fully-fledged war with Russia.
"There is some stabilisation after the tension that built up
last week on Crimea, the worst case scenario of an armed
conflict in Ukraine has been partly ruled out according to the
market moves," said Cristian Maggio, emerging markets strategist
at TD Securities.
MSCI's emerging markets index is headed for the
fifth straight week of gains, though it is down 3 percent
Indian markets posted their biggest weekly gain since early
2013, as foreign money poured in thanks to better
economic data and hopes that April elections will usher in a
more reform-minded government.
The opposition Bharatiya Janata Party is likely to emerge as
the single largest party, opinion polls show. Investors hope BJP
leader Narendra Modi will be able to emulate his strong economic
track record in the coastal Gujarat state at the national level
But emerging markets are displaying a clear divergence in
performance, with Asian assets seeing strong gains, in contrast
with Russia and Turkey which remain under pressure.
"The weakening sentiment on Russia could trigger a rotation
out of that country's assets into economies with improving macro
fundamentals such as India, Brazil and Indonesia," Barclays
analysts said in a note.
Foreign investors purchased a net $208 million worth of
Indian shares on Thursday, marking a 15th consecutive buying
session. They have also bought almost $5 billion in Indian debt.
Those purchases pushed the Indian rupee up 1.3 percent
on the week, leading gains across Asian currencies.
The picture was gloomier in emerging Europe.
Moscow shares were up slightly but headed for their
biggest weekly loss since May 2012, having fallen more than 7
percent this week. Turkish shares were flat on Friday,
while eastern European bourses from Prague to Budapest were down
0.5-1.0 percent .
Maggio noted eastern Europe's reliance on Russian natural
"All of eastern Europe remains concerned by Russia's
aggressive attitude towards its neighbours. There is enough on
the table to keep volatility active," he said.
The rouble eased 0.4 percent, heading for its fourth
straight week of losses against the dollar, even though the
European Union is taking only minor steps in condemning Russian
actions in Ukraine.
The Turkish lira fell 0.3 percent, facing pressure
before March 30 municipal elections that could see an erosion in
the standing of Prime Minister Tayyip Erdogan.
The Ukrainian hryvnia however rose around 2 percent beyond 9
per dollar, having strengthened an astonishing 30
percent since the start of the week as markets bet the country
would receive external aid soon.
Investors continued to pull cash out of emerging market
funds in the week to March 5, with equity funds losing more than
$3 billion but outflows from bond funds slowing to around $500
million, banks said, citing data from fund monitor EPFR Global.
For CENTRAL EUROPE market report, see
For TURKISH market report, see
For RUSSIAN market report, see )