Volatility in global financial markets has surged. There are well-known channels through which this influences cross-border capital flows. However, the exposure of the Indian economy is relatively small because the requirement for capital import the gap between investment and savings-is modest.
On February 6 in Business Standard, I wrote "Uncertainty has declined", pointing to the fact that the volatility index (VIX) and Merrill Lynch Option Volatility Estimate (MOVE) were at low values compared with those seen in the year following February 2022, where Russian President Vladimir Putin invaded Ukraine and the US Federal Reserve started hiking rates, at which time the world looked quite uncertain. The world economy got its next air pocket last week. The VIX rose from 19 on February 6 to 26 on Saturday, and MOVE went up from 100 to 180 in the same period.
This is, of course, a more stressed global financial environment. To add to the problems, in these difficult times, developed market (DM) central banks continue to raise rates. This combination (high DM interest rates plus high risk) is one in which global investors (e.g. Indian households) like to hold more DM assets. In 2022, we saw how effervescence around start-ups and initial public offerings in India, and other illiquid risky assets, became more subdued. We will see more of that in coming weeks.
But there is one respect in which the present state of the Indian economy creates a comfortable situation: This is a low scale of requirement for capital import.
Bu hikaye Business Standard dergisinin March 20, 2023 sayısından alınmıştır.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
Already a subscriber ? Giriş Yap
Bu hikaye Business Standard dergisinin March 20, 2023 sayısından alınmıştır.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
Already a subscriber? Giriş Yap
Brokerages bullish on ITC's long-term growth
Despite a subdued performance in the March quarter (Q4FY24), brokerages remain optimistic about the long-term growth prospects of ITC.
InterGlobe Aviation hit an air pocket in Q4
The civil aviation market has become more or less a duopoly with leader Indigo InterGlobe Aviation-reporting strong Ebitda growth of 45 per cent yearon-year (Y-o-Y) to ₹3,980 crore in the January-March quarter (Q4) of FY24, with PAT rising more than two times to 1,890 crore.
Vishares jump 7.5% on UBS upgrade
A'likely' relief on the government dues front for Vodafone Idea (VIL) and expectations of telecom tariff hikes could drive the share prices up by 70-80 per cent, global broking firm UBS said in a report.
Come June 24, Adani Ports to replace Wipro in Sensex
Nifty ends flat after Adani Ports and Special Economic Zone (SEZ) hitting 23,000 mark will replace Wipro in the benchmark 30-share Sensex, index tracker Asia Index said in a notification on Friday.
GQG, Qatar Investment and IHC make hefty gains on Adani bets
The resurgence in Adani group stocks over the past year has resulted in substantial gains for their investors, including US-based GQG Partners, the Qatar Investment Authority, and Abu Dhabi's International Holding Company.
Size matters when it comes to MF voting patterns
Asset managers are speaking up more than before
Chennai on front foot ahead of IPL final
Hotel, flight bookings have increased by 15%
A naturalist's discovery of India
This exploration of India's wild heritage by author, academic and naturalist Stephen Alter is not a journey through the country's few remaining wild areas.
INDIAN SPICES IN GLOBAL PICKLE
There are many regulators in the sector, but none regulates the entire supply chain from farm to market. Is the matter falling between stools?
Global minimum tax deal on multinationals may fail
US, India, China have reservations over the terms of the deal: Italy economy minister