Overnight the Sensex has gapped above its October 2011 high, reversing the downtrend of the preceeding 12 months. This is a fresh example of the improving risk outlook that has taken hold in 2012 and we note that the USD has also weakened overnight, backing away from the important resistance threatened by recent profit taking. A renewed dollar slide isn’t a one-way bet as the profit taking threat remains in the background but for a day or two there should be more follow-through as investor confidence returns.
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Barclays Capital