Chink in the Armour

From hitting all-time highs to crashing over 2,000 points on August 5-the equity markets have been seeing much volatility. What lies ahead?

- RAHUL OBEROI

MONDAY MAYHEM-THAT was the echoing sentiment on August 5, when the benchmark BSE Sensex crashed 2,222 points as fears of a potential recession in the US drove investors away from risky assets. This fall was seemingly triggered by external stimuli and not as much by domestic forces as the equity markets were hovering at record-high levels. Amid geopolitical tensions, the Bank of Japan's (BOJ) recent decision to raise interest rates triggered a ripple effect across global markets, including India. At the July meeting, the BOJ raised its policy interest rate to 0.25% from 0-0.1% earlier. Despite the volatility, analysts remain bullish on India, citing long-term growth.

Experts also expect the upcoming US Presidential elections to bring some unpredictability. The lukewarm global job market and on and off geopolitical tensions are likely to add to the woes.

Harshad Borawake, Head of Research and Fund Manager at global mutual fund AMC Mirae Asset Investment Managers (India) says, "The risk can be from global uncertainty, oil price spike or sudden increase in international commodity prices."