On Friday, the Indian markets were reacting to the global cues and it had little to do with the macro challenges at a domestic level. Here are some of the factors that drove the Nifty and the Sensex very near to their life-time high levels.

a) The signals of a US-China trade treaty were positive for the markets, even if it was only going to be a Phase 1 treaty. The good thing is that the December 15 tariffs are now out and the markets have less to worry about.

b) The possible treaty between the US and China also gave rise to expectations that China could announced a major domestic stimulus very soon. This is likely to be positive for global demand and for stocks in metals sector.

c) The decisive victory of Boris Johnson in the UK elections was also a positive for the global markets as it now underlines that BREXIT would happen under any circumstances by January 31. This gives greater certainty to business environment.

d) The sharp rally in Asian markets was also positive for the Indian markets. Most of Asia including Hang Seng, Nikkei and the KOSPI were sharply in the positive on trade truce news. This rubbed off on Indian markets also.

e) Despite the RBI unlikely to cut rates in February due to sharply higher inflation, the markets were higher betting on a possible fiscal stimulus announcement by the finance minister. This also helped market sentiments.

f) After a long time, the risk on trade is returning to emerging markets and India is expected to be a big beneficiary of this shift.

In a nutshell the momentum appears to be in favour of the markets despite the macros putting the economy under some degree of pressure.