Another day of mayhem at the markets. The Sensex crumbled by over 400 points while the Nifty lost over a 100 points. The markets opened weak and drifted lower through the day. Today the spooking factor was Thailand. The Thai markets crashed over 15% after the restrictions put in place yesterday on foreign funds. This gives us a sense of the way emerging markets can and do react to adverse news.
The reason Thailand put these measures in place was , one the Thai Baht is trading at a 9 year high , and the other is the flow of "hot money" or speculative investment is at a whopping 13 billion for the year. More on this can be read here.
These circumstance spooked all emerging markets in the region and worldwide.
There are faint resemblances to the Indian situation and it would pay to be cautious. The money that has flowed in could vanish as fast, if not faster, taking the markets for a nose dive of the kind we saw last May.
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