The fact that the Indian economy is less export-oriented places it in a stronger position against China when it comes to global asset allocation of foreign institutional investors (FIIs), said Jeff Hochman, portfolio strategist and director (technical research), Fidelity International. This will lead to increased weightage on India for investments going forward. In the current situation where a slowdown in US economy seems eminent, India holds stronger ground even within the group of emerging markets, he said.

But even though India is well positioned to face and survive the economy onslaught, the current volatility in markets has thrown up concerns. “Volatility in global markets and concerns on subprime evolving in a bigger manner will see retrenchment of money from emerging markets to developed economies considered safer,” Hochman said.

For India though, the concerns come on account of a higher than expected currency appreciation and growth coming down because of infrastructure growth not keeping up — while growth of six infrastructure industries dropped to 4 per cent in December 2007 from 9 per cent a year ago, during April-December it fell to 5.7 per cent from 8.9 per cent. Other factors that will impact investments and markets in the short term are agriculture-led inflation and oil prices.

The current volatility prevailing in global markets on account of factors not related to India will ensure the markets remain volatile. “I expect volatility to prevail till June-July 2008,” Hochman said. “They will remain choppy for 2008 and things are expected to settle down in 2009.”

... contd.