A slew of negative news, from the natural and nuclear disasters in Japan to rocketing commodity and bullion prices to political upheaval in the MENA (Middle East and North Africa) region, has made sure that equity markets, across the globe, live off, and not on, the edge. Astonishingly though, even as unprecedented volatilities threaten to shake the investors' confidence, stock markets, globally, have demonstrated remarkable resilience so far. But the big question is: Can they maintain their resilience even as old risks such as sovereign debt crisis in Eurozone periphery remain while new ones like the civil unrest in the Arab world and North Africa appear?

On April 13, 2011, the Sensex notched up a gain of 434 points to close at 19,725 while NSE Nifty rose 134 points to end the day's trading at 5,920, snapping up their losing streak over the preceding five sessions. Before that, the Sensex recorded its first ever quarterly loss during the March quarter in the last two years since December 2008 and was ranked amongst the worst performing markets in Asia during the quarter, as inflation worries and spectrum (2G) scam hit investors' sentiment hard. But on the positive, in March, indices posted their highest ever monthly gains since September 2010, as FIIs (Foreign Institutional Investors) turned net buyers for the first time in the last three months of CY2011, pumping in close to $1.5 bn in Indian equities during the month, after having pulled out investments worth $0.5 bn during the preceding two months. Stock markets elsewhere too witnessed similar trends, signaling that investors' risk appetite remains stronger.

Equities in developed markets such as the US and Europe turned in positive returns, driven by sustained economic recovery and better job data, brushing aside negatives such as spiraling food and oil prices and sovereign debt concerns in some of the nations in the eurozone periphery. According to JP Morgan, the global financial powerhouse, equities were supported by a combination of better-than-expected economic data and continuing accommodative monetary policy in developed economies. It says that leading economic indicators in the G7 economies rose sharply this year in response to a flurry of good news: profit growth in the US and core Europe remained strong, and US unemployment fell consistently along with fear of a double dip recession. That apart, bailouts by governments in the US and Japan too have led to increased inflows into global equities. The Obama Administration pumped in a huge $600 bn into its banking system as part of its second round of quantitative easing to, what NY Times commented as, "jolt the economy into recovery." In Japan, the central bank injected $183 bn into its financial system, or nearly 3.34% of its GDP, to revive the earthquake and tsunami-ravaged economy. Further, real interest rates, which remained negative throughout Europe and North America, continued to encourage carry trade, though the European Central Bank (ECB) has been maintaining a hawkish stand since early April this year.

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