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Global liquidity drives Nifty 50, but risk-reward is getting unfavourable

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It’s not hard to see why the Indian markets are racing ahead in the past few weeks. The rise of the global markets and the positive assessment of the opening up of the economy has given a push to the markets.

The fact that the global markets are awash with liquidity has also been a keen influence in driving the Nifty 50 past the psychological 10,000 mark.

In the past week, the Nifty has gained 8%. Note that for some time now, the Indian market has been slavishly following the US markets.

Since the US announced a massive stimulus package in end-March, both the S&P 500 and the Nifty 50 have gained about 32-37%.

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