Buoyant Indian Financial Markets

Buoyant Indian Financial Markets

Buoyant Indian Financial Markets

Despite vanishing FIIs, the Indian markets remain resilient and staying afloat .The US crisis has significantly affected the investor’s sentiments. There will be substantial capital out flows owing to investor’s tendency to with-draw from risky markets. This would lead to liquidity crunch that will, in turn, put pressure on the Indian bourse.

Currently the Indian economy is reeling under high inflation and a moderate growth rate. The Indian economy continues to show good health because of the strength of its domestic drivers, like infrastructure projects, SME sector exports and good yielding from agriculture sector. India is now in a position to supply the food grains to U.S.A.

The siphoning of funds by FII is restricted in India by the SEBI regulations from 2008 January on wards, helped India to stay afloat in this stock market crisis. The FIIs usually play their game through Participatory notes (P notes) when ever they feel the Indian markets are risky they with in no time with draw huge quantities of funds from Indian stock markets and it effects the debacle of Bourses and causes panic among the Domestive investors .

The globalization of stock markets & financial markets has the retrospective effect on the markets from Tokyo to Newark with in a span of 24 hours. But once risk aversion subsides, foreign funds would re-enter India. This would depend on how soon the domestic market fundamentals regain momentum.

Ever since the US investment banking gaint “Lehman Brothers filed for bankruptcy, there has been a considerable out flow of FIIs money from Indian stock markets. On September 15, the out flow stood at Rs. 856.4 crore. It further increased to Rs 1,333.5 crore on September 18, sensex lost 470 points and Nifty shed 155 points on the day of Lehman filed for Bankruptcy . The Bank index dipped 3.3 percent, Realty index lost 7.65 percent, and IT index closed 5.5 down on the same day.

The cause behind US...

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