BackResistance to shock
Resistance to shock
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New Delhi: At the time of writing this, the Sensex has dipped again, down 2.88% from the previous close now. But a consensus seems to be emerging that India while interconnected to the rest of the world, is still relatively insulated. Robert Prior-Wandesforde of Credit Suisse has conducted a study where he analyzed the sensitivity of leading non-Japan Asian economies to the present global risks-US/Euro zone crisis, burst of asset bubble in China and oil price shock. Except for an oil price shock, it seems the local economy is relatively safe.
Says Pundit Prior-Wandesforde:
Our analysis suggests Taiwan is highly vulnerable on each count, probably suffering the largest hit of all from a US/euro zone demand shock and amongst the biggest effects from the other three scenarios. India, meanwhile, is at the other end of the spectrum, reflecting its relative lack of integration into the global economy and financial system.
While the study is re-assuring, what it does not assure is the continuance of investor interest and foreign inflows. India might emerge pretty unscratched, but a crumbling global economy could mean foreign investors pulling out money from equities.
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