EMERGING MARKETS-India leads emerging stocks higher; Ukraine fears ease
By Sujata Rao
LONDON, March 7 (Reuters) - 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 year-to-date.
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 if elected.
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. Continuación...