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The negativity seen in global capital markets in May flowed into June as well. Global worries subsided as Greece voted to remain a part of Euro for now, putting to rest the fears of a Greek exit. Investors, however, remained cautious on Europe; data from EPFR Global (aggregator of fund flow and asset allocation data) shows that investors till the last week of June preferred to pare exposure to global equity funds and inflows were seen in bond funds. Provisional numbers based on combined monthly, weekly and daily data show European equity funds posted their biggest quarterly outflow since the third quarter of 2008. Also, for emerging market equity funds, though inflows were good, redemptions of around $10.5 billion during the quarter upset the balance. The big positive stroke came at the end of the month when the EU Summit concluded with unexpected aid announcements for Spanish banks in the form of direct recapitalization from the bailout fund and the possibility of bailout aid to Italy as well. In addition, the summit agreed on a single banking supervisor for the region and a $129 billion economic growth package. All this was received well and equity markets globally rallied sharply.

Also See | Monthly market commentary (PDF)

Graphics by Paras Jain/Mint

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