The rise in the Indian markets, often touted a pre-Budget rally, could be a case of a rising tide lifting all boats. Though India has been one of the best-performing markets in the last two months, it has lagged some of its emerging market peers such as the Philippines, Thailand and South Africa.

Analysts say the buoyancy seen in the equities market isn’t restricted to India. They attribute the trend to the availability of easy money, which is finding its way into most emerging markets.

Since June 7, India’s benchmark indices — the BSE Sensex and the National Stock Exchange Nifty —have gained about three per cent, while Taiwan’s Taiex and South Africa’s FTSE Top 40 IX have risen about four per cent.

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“It has been a mixture of events. Global risk appetite is returning due to a recovery in the US. The liquidity situation has been good. Given this favourable global backdrop in the context of what is happening domestically, we are seeing our markets do well,” said Saurabh Mukherjea, chief executive (institutional equities), Ambit Capital.

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Tirthankar Patnaik, strategist at Religare Capital Markets, said, “Clearly, it is 50-50. The markets have been going up due to a combination of both Budget hopes and the global situation. One can’t not expect from the Budget. The Street wants the government to maintain the path of fiscal prudence and provide a fiscal direction for the next three to four years.”

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Experts say the Indian markets’ recent under-performance could be due to the sharp gains seen in May, when the Narendra Modi-led National Democratic Alliance was elected to the Centre with a thumping majority. Also, Indian markets have given up some of the gains in the past month, spooked by escalation in crude oil prices due to the crisis in Iraq, as well as worries this year, the monsoon will be deficient.

“Our market has seen sharp gains this year. It is only natural for the market to consolidate. The sideways movement we have seen in the past month could be to digest that strong up-move. A little bit of caution is not unwarranted,” said Ajay Bodke, head (investment strategy and advisory), Prabhudas Lilladher.

Market players said though the global liquidity situation was helping Indian stocks, expectations of a revival in the economy, aided by various steps to be taken by the new government, was helping India stand out in the eyes of foreign institutional investors (FIIs).

“India has been head and shoulders with large stock markets. It is one of the key stock-leading performers this year. This is due to the global backdrop and a combination of political events in India, which has given FIIs the confidence in growth prospects,” said Mukherjea.

This year, foreign investors have been pumping in big bucks into Indian stock markets. So far this year, FII investment has already exceeded the $10-billion mark; this has seen the benchmark indices rally about 25 per cent.

“Now, investors are looking forward to the Budget, as there is hope there will be policy announcements which will help kick-start the investment cycle and give a fillip to the manufacturing sector,” said Bodke.