India: 'safe haven' from crisis

DESPITE the fact that India faces a general election in mid-February, stock markets there have suffered almost no fall-out from the Asian financial crisis. Indonesian and Thai shares have lost 80 per cent of their value in dollar terms since September, but Indian shares have risen 10 per cent.

"India has been something of a safe haven," said a London-based fund manager handling pounds 300m in Asian equities. "The Indian rupee has performed incredibly well in terms of holding its value against the dollar."

MK Khanna, chief executive of UTI Securities in Mumbai, explained why India has been insulated so far: "The Indian rupee is not yet fully convertible, which helps explain why it has not seen major speculative activity. It is also worth noting that, fundamentally speaking, the Indian economy has not been dependent on exports for growth, and Indian companies, which enjoy access to a large domestic capital market, are generally not as highly geared as companies in the rest of Asia."

In the final lap of the electoral campaign, however, the Indian market could become vulnerable. The ruling coalition is seen by most commentators as unlikely to be returned to power.

Meanwhile, finance minister Chindambaram is viewed by international investors as a pro-liberalisation policy-setter. The last budget, passed in mid- 1997, cut taxes, removed various subsidies, and increased the ceiling for foreign ownership in Indian-listed companies. It was widely applauded as reforming.

But the opposition Bhartiya Janata Party, a right-wing nationalistic grouping, is now playing politics with the Asian financial crisis issue. BJP politicians have recently again referred to the damage to India that can be caused by "open" capital markets.

BJP president LK Advani was quoted last week as saying he was suspicious of "short-term oriented" international fund managers. The campaign manifesto committee of the BJP has discussed plans to introduce a "lock-in" period of six months for portfolio investments.

The Indian stock market is relatively small, by developed market standards, but it is one of the larger emerging markets. It is capitalised at $130bn (pounds 76.5bn) compared with $17bn for Indonesia. International investors have approximately $10.5bn invested in Bombay, with another $8.5bn invested in Indian global depositary receipts traded in London.

To date, international investors have discounted the BJP anti-globalisation rhetoric as pre-election breast-beating. The Indian rupee strengthened last week from Rps40.25 to the dollar to Rps38.3 to the dollar, while the Bombay stock market index has been steady at around 3,350.

But this could change if the BJP threat is seen as becoming part of a serious manifesto that includes curbs on international investors, and at the same time, the BJP appears headed for victory in the polls.

Most opinion in India points to another coalition government, with the BJP as the largest single party. The elections will be held from 16 February, and results are unlikely to be finally known in this mammoth democratic exercise until the first week of March.

q Gianluca Ricardo is the pseudonym of a City financial executive.

News
people
News
people
News
peopleStella McCartney apologises over controversial Instagram picture
Life and Style
Laid bare: the Good2Go app ensures people have a chance to make their intentions clear about having sex
techCould Good2Go end disputes about sexual consent - without being a passion-killer?
PROMOTED VIDEO
Arts and Entertainment
Richard Burr remains the baker to beat on the Great British Bake Off
tvRichard remains the baker to beat as Chetna begins to flake
News
i100
Sport
footballArsenal 4 Galatasaray 1: Wenger celebrates 18th anniversary in style
Arts and Entertainment
Amazon has added a cautionary warning to Tom and Jerry cartoons on its streaming service
tv
News
people
News
The village was originally named Llansanffraid-ym-Mechain after the Celtic female Saint Brigit, but the name was changed 150 years ago to Llansantffraid – a decision which suggests the incorrect gender of the saint
newsA Welsh town has changed its name - and a prize if you can notice how
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
Kristen Scott Thomas in Electra at the Old Vic
theatreReview: Kristin Scott Thomas is magnificent in a five-star performance of ‘Electra’
News
Destructive discourse: Jewish boys look at anti-Semitic graffiti sprayed on to the walls of the synagogue in March 2006, near Tel Aviv
peopleAt the start of Yom Kippur and with anti-Semitism flourishing, one Jew can no longer ignore his identity
Life and Style
Couples who boast about their relationship have been condemned as the most annoying Facebook users
tech
Arts and Entertainment
Hayley Williams performs with Paramore in New York
musicParamore singer says 'Steal Your Girl' is itself stolen from a New Found Glory hit
News
i100
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

Trust Accountant - Kent

NEGOTIABLE: Austen Lloyd: TRUST ACCOUNTANT - KENTIf you are a Chartered Accou...

Graduate Recruitment Consultant - 2013/14 Grads - No Exp Needed

£18000 - £20000 per annum + OTE £30000: SThree: SThree are a global FTSE 250 b...

Law Costs

Highly Competitive Salary: Austen Lloyd: CITY - Law Costs Draftsperson - NICHE...

Day In a Page

Italian couples fake UK divorce scam on an ‘industrial scale’

Welcome to Maidenhead, the divorce capital of... Italy

A look at the the legal tourists who exploited our liberal dissolution rules
Time to stop running: At the start of Yom Kippur and with anti-Semitism flourishing, one Jew can no longer ignore his identity

Time to stop running

At the start of Yom Kippur and with anti-Semitism flourishing, one Jew can no longer ignore his identity
Tom and Jerry cartoons now carry a 'racial prejudice' warning on Amazon

Tom and Jerry cartoons now carry a 'racial prejudice' warning on Amazon

The vintage series has often been criticised for racial stereotyping
An app for the amorous: Could Good2Go end disputes about sexual consent - without being a passion-killer?

An app for the amorous

Could Good2Go end disputes about sexual consent - without being a passion-killer?
Llansanffraid is now Llansantffraid. Welsh town changes its name, but can you spot the difference?

Llansanffraid is now Llansantffraid

Welsh town changes its name, but can you spot the difference?
Charlotte Riley: At the peak of her powers

Charlotte Riley: At the peak of her powers

After a few early missteps with Chekhov, her acting career has taken her to Hollywood. Next up is a role in the BBC’s gangster drama ‘Peaky Blinders’
She's having a laugh: Britain's female comedians have never had it so good

She's having a laugh

Britain's female comedians have never had it so good, says stand-up Natalie Haynes
Sistine Chapel to ‘sing’ with new LED lights designed to bring Michelangelo’s masterpiece out of the shadows

Let there be light

Sistine Chapel to ‘sing’ with new LEDs designed to bring Michelangelo’s masterpiece out of the shadows
Great British Bake Off, semi-final, review: Richard remains the baker to beat

Tensions rise in Bake Off's pastry week

Richard remains the baker to beat as Chetna begins to flake
Paris Fashion Week, spring/summer 2015: Time travel fashion at Louis Vuitton in Paris

A look to the future

It's time travel fashion at Louis Vuitton in Paris
The 10 best bedspreads

The 10 best bedspreads

Before you up the tog count on your duvet, add an extra layer and a room-changing piece to your bed this autumn
Arsenal vs Galatasaray: Five things we learnt from the Emirates

Arsenal vs Galatasaray

Five things we learnt from the Gunners' Champions League victory at the Emirates
Stuart Lancaster’s long-term deal makes sense – a rarity for a decision taken by the RFU

Lancaster’s long-term deal makes sense – a rarity for a decision taken by the RFU

This deal gives England a head-start to prepare for 2019 World Cup, says Chris Hewett
Ebola outbreak: The children orphaned by the virus – then rejected by surviving relatives over fear of infection

The children orphaned by Ebola...

... then rejected by surviving relatives over fear of infection
Pride: Are censors pandering to homophobia?

Are censors pandering to homophobia?

US film censors have ruled 'Pride' unfit for under-16s, though it contains no sex or violence