After opening the day on a positive note, Indian share markets have continued their momentum and are presently trading in the green. Sectoral indices are trading on a positive note with stocks in the telecom sector and energy sector leading the gains.

The BSE Sensex is trading up 193 points (up 0.7%) and the NSE Nifty is trading up 58 points (up 0.6%). The BSE Mid Cap index is trading up by 1%, while the BSE Small Cap index is trading up by 0.8%. The rupee is trading at 64.27 to the US$.

Indian stock markets are witnessing buying interest today on the back of a host of domestic as well as global factors. A spurt in the Nifty Bank index has aided the rally for Nifty50, which touched its all-time high today. The momentum is also seen ahead of the French presidential elections and quarterly result announcements of Indian companies.

Apart from that, government think tank NITI Aayog has presented a glimpse of Vision 2031-32. As per the news, NITI Aayog has envisaged a new India in which all citizens in 15 years will have houses with toilets, two-wheelers or cars, power, air conditioners and digital connectivity.

All the above data comes as a welcome breather for Indian financial markets. The only question is will the Indian economy and Indian stock markets continue this momentum?

As far as the Indian economy is concerned, there are considerable challenges that lie ahead which the government seriously needs to address.

For Indian stock markets, our research in March revealed that, in aggregate, the profit margins of Sensex companies were trading at ten-year lows. So, if profit margins were to revert to their long-term averages, the Sensex may hit 40,000 three to four years down the line. To know more on this, you can download our Sensex 40,000 report.

In the news from global financial markets, Britain's attempt to exit from the European Union (Brexit), has just took a new twist. Britain's prime minister, Theresa May, has decided to capitalize on her party's 18% lead in the opinion polls. This week, she called for a snap general election on June 8. This could stymie a real Brexit.

The recent edition of Vivek Kaul's Inner Circle (requires subscription) explains what repercussions the above development could have on stock markets in the near term.

Many expect the Brexit negotiations could now take a very long time. Owing to this, there remain concerns about what effect the delay may have on global trade and the Eurozone.

On the other hand, if Britain divorces from the EU bloc, it'll have major implications for financial markets and exchange rates. It will also lead to more global economic uncertainty which, by the way, stood at its all-time high during the start of this year as seen from the chart below:

Global Economic Uncertainty Index at All-Time High

Apart from above, Brexit can also affect the sustainability of India's long term growth story as it will hamper global trade. Should even one more country leave the EU, it could trigger a domino effect that would leave the regional bloc standing on shaky ground. And Asia could stand to lose from that.