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Clearly, investors couldn't have asked for a better gift on the eve of Diwali. Indian stocks continued to surge during the closing hours of the day and in the process, created a record of sorts. The BSE Sensex closed higher by around 430 points today and touched 20,894, its highest ever closing, surpassing the previous high of 20,873 recorded in January 2008. NSE Nifty recorded gains in the region of 120 points, closing higher by 2%. BSE Midcap and Small cap indices didn't go up as strongly as their large cap counterparts but still managed decent gains of around 1% each.

Other Asian indices were in equally buoyant mood as all of them logged in strong gains. Europe too has opened on quite a strong note. Rupee was trading at Rs 44.2 to the dollar at the time of writing.

Today's gains had quantitative easing written all over it. Markets were enthused by the fact that the US Fed is in no mood to put brakes to its liberal monetary policy. In fact, it further loosened its purse strings and announced fresh round of quantitative easing to the tune of US$ 600 bn. Hoping that some of this money would find its way into risky assets like stocks and commodities, there emerged a buying frenzy amongst investors and Indian markets were no exception. Sentiment in India was also buoyed by the fact that Coal India, its biggest IPO ever received a phenomenal response on its debut on the stock exchanges. However, we would like to caution investors that they start investing left, right and center at their own peril. It is during times such as these that the tendency to invest in bad quality stocks is at its peak and hence, such a temptation should be avoided at all costs.

Besides Asian equities, the fresh round of quantitative easing announced by the US Fed also seems to be working its magic on some other key commodities. Take crude oil for instance. As per reports, oil has risen for the fourth straight day today and is trading pretty close to its six month highs. However, this may not be all, the US dollar may continue to weaken going forward and hence, oil could still have some more steam left. While this is music to the ears of crude oil producing countries, wrinkles would have started appearing afresh on the foreheads of Indian policymakers as they grapple with balance of payments problems in view of the higher crude price. While efforts are being made to increase oil security, it still amounts to too little, too late we believe.