Indian equity market surges..

Indian equity benchmarks surged Thursday, led by strengths in shares from the banking, capital goods and auto sectors. Falling commodity prices are a big positive for India and this could even prompt many foreign investors to increase their weightage for the country in their portfolio. Also giving a boost to the market was the wholesale price inflation, which cooled to below 6 percent mark in March after a gap of more than three years, backed by softening of prices of primary articles, particularly food items.

But the overall global macro picture shows money is moving away from emerging markets. For example, even though Wholesale Price Index (WPI) is decreasing we may not see the similar effect in Consumer Price Index (CPI). Similarly, even though CAD might be improving on a temporary basis, we may not be able to see significant growth in exports leading to a long-term sustainable trade deficit.

The rupee strengthened on Thursday with the underlying sentiment remaining bullish on the back of growing rate cut hopes from the Reserve Bank of India's upcoming annual monetary policy on May 3.