Just
about a month back, launching a "dedicated Brazil, Russia,
India and China (BRIC) Fund" seemed to be a staple for
every fund manager worth his salt. Emerging market portfolio
allocations to India were on their way up and it was ceremoniously
proclaimed by looking at the numbers, quite frankly, that
India offered the maximum scope for value accretion among
the emerging financial markets.
So
what's changed since then? Nothing except that the secular
"super cycle" across asset classes and economies
has witnessed a sharp correction. Nothing except that we have
witnessed the first ever 1,000 points fall in the Indian benchmark
index in a little over two trading hours. Nothing except that
volatility has become so much a dirty word that every trader
would rather have the sword of Damocles hang over his head
than be forced to call the market in this phase.
If
you are looking for a method to study this madness, you are
just one in the crowd. What will separate you from this fickle
mob is exactly how you go about it. While it is often true
that manic falls like the 1,111 point crash witnessed on the
Sensex on May 22, they are triggered as a result of the market
internals like, margin calls on overleveraged positions.
It is also extremely critical that we do not lose sight of
the fact that all this is a part of a bigger picture involving
multiple externalities, which do not prey on equity markets
alone. |