Indian Markets Shrug-Off Global Fears

Wall Street is sneezing but Indian markets refuse to catch cold. On Friday US markets were rocked by rising jobless numbers, Indian Markets however opened weak but by closing it shrugged-off global fears.

Have India''s markets decoupled from the US? Those who believe that say that Asia''s domestic consumption and intra-regional trade have grown enough to insulate the region from US shocks.

Dow Jones was shed 250 points on Friday, however Sensex gained 6.41 points on Monday. And that is why India suddenly seems to have developed immunity from the global shocks. Sensex gained 1.13 per cent for the week while Dow Jones lost 1.83 per cent.

World stock markets have outperformed US equities by a factor of two since a global bull market began in 2003. Now if there were to be a severe correction in US equity market and a severe correction in the credit market, will this ratio still hold on the real test is still to be known.

In the event of a sharp deceleration in US consumption growth, it will be markets like India and for that matter the entire Asia ex-Japan markets which will face the critical decoupling test.