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From Manic to Panic: Are We in for 2008-like Stock Market Selloff

As the gravy train of loose monetary policy is brought to an end the resilience of global economic recovery is being tested. Can the global economy sustain itself without the life support provided by central banks?

As soon as the US Federal Reserve decided to taper off its monetary easing policy by the end of October 2004, speculation arose over a possible hike in interest rates soon. These fears coupled with slowing growth in emerging markets, the rising dollar, the faltering European economy and a steep fall in the demand for oil indicated a deflationary trend in the global economy. It is in the wake of such news that global markets are showing high volatility and some have dropped significantly in recent days.

As the gravy train of loose monetary policy was brought to an end the resilience of global economic recovery is being tested. It would be interesting to see whether the global markets are able to stand up to the economic challenges without the life support provided by central banks, or will the massive government bubble created to sustain global economy burst and create a new crisis.

India is certainly not immune to this global trend. It is reported that FIIs have pulled out Rs 800 crores from Indian markets since the beginning of October. We would like your response on the performance of the global stock markets in the wake of the Federal Reserve’s recent moves and the state of the Emerging Markets as well as the EU.

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