When the experts talk, the question that keeps resurfacing is “will the Indian markets test the lows of 2008 January again?”

That to my mind is a very positive sign, since every one who is anyone in the Indian stock markets believes that the market will not go below the January lows. That means a bottom has been made and although the markets might swing between a range 4100 to 5300 on Nifty, the only long term view is up.

According to experts the BRIC (Brazil, Russia, India and China) theme looks resilient and very little redemption has been seen over the last two years.

The setback in Indian and Chinese markets was long overdue as both the markets were showing evidence of bubble formation. India is getting more attractive with the falling the share prices and people have started putting money back in India.

Commodity Hit:

In the short run, with the commodity prices having run so far, there is a possibility of some setback. But the medium to long-term story for commodities is very powerful.

With the arrival of India and China in the global economic scene creating very strong demand for commodity generally and not just for hard but also soft commodities, the outlook is very positive. Brazil and Russia are two of the key beneficiaries of strong commodity prices.

India and China are two of the weakest emerging markets in the world this year. But what surprised lots of people is how resilient the theme has been; The largest BRICs fund has seen very few redemptions, there have been several times when the markets have fallen by 10% or more and each time there was hardly had any redemptions in the BRIC funds.

Allan Conway, Head of Emerging Market Equities at Schroders, said’”we have a total of USD 27 billion again in emerging markets overall and year to date, we have got slight positive inflows and BRICs as well has been broadly flat in terms of flows. So when we spoke to investors about BRIC, one of the key points we had made was that they should view an investment in BRIC as a long-term investment for their pension fund because this theme is very powerful. It is completely transforming the global economy, it is the reason why today the emerging markets overall are likely to account for 75% of global growth this year.

Last year, it was 65% of global growth and the reason for that is China and India and their arrival on the scene driving the global economy and now as these countries develop and progress, they become more important in the global economy and the returns to the investors are going to be huge over the next 10-15 years. Now there will be short-term volatility, the overall trend is clearly going to be up. There will be volatility around that but it is the sort of investment that you simply put into a pension fund and over 10-15 years, it will do extremely well.”

At the current time, India and China were long overdue a setback; in many of the countries, and in particular China, Russia and not so much India, they have fantastic strong reserves and the ability to increase infrastructure spending to support economic growth.

Even if there is monetary tightening, it is the reserve level in most emerging markets which is very good. India is one of the exceptions. It has a weak current account and fiscal but that is unusual across the world of emerging markets. You should see strong current accounts and good fiscal positions, and high levels of reserves.

For a country like India, which is growing so strongly, it is not so surprising that you see a modest current account deficit. The disappointment really is the fiscal side. The fiscal deficit is more of an issue and that limits the government’s ability to iron out the cyclicality. We are in a situation where things might look a bit more difficult and the government has got less room for maneuver when it is running a fiscal deficit.