Effect of Globalization on Asian Markets (India, Hong Kong, Japan)
& the Diary of Recent Indian Stock Slump

- by Viswanath G. K. Akella *

Page - 1

It's true that opening up of capital markets, i.e., attracting FIIs would improve a country's economy, and India also opened up its markets since 1990s. Since then, FIIs invested heavily in Indian stock equity and the market's dependency on the FIIs increased equally. With the help of globalization, the stock markets around the world became correlated to an astounding degree. Now the correlation between DJ index and emerging market's indices is around 90%.

Figure 1 shows the stock indices of BSE and DJIA since April 17, 2006. It can be observed that when there is a dip in DJIA by 1%, there is almost a dip of 10% in sensex, Figure 2 shows that the correlation between these two indices since April 17th is found to be 93%. The fact that emerging markets (majorly South Asian markets) are dependent heavily on the US markets as can be viewed from Figure 3. It can be interpreted that if there is a little dip in DJIA, soon afterwards, markets in Japan, Hong Kong and Mumbai will dip.

Figure 1: BSE Sensex & DJIA Points Since April 17th

Next

* Contributed by -
Viswanath G. K. Akella,
PGPM 2007,
Great Lakes Institute of Management, Chennai.

MBA Jobs	MBA Preparation	B-Schools	MBA Forums	About CoolAvenues
Senior Mgmt Jobs	CAT / MAT/ CET	Dean talk	CAT Preparation	Post a Job
Finance Jobs	Admission Alert	B-School Profile	Executive MBA	Advertise with Us
Marketing Jobs	MBA Insider	B-School Diary	Career Help	Contact us
HR MBA Jobs	MBA Admission Process	Summer	GMAT	Privacy
Operations MBA Jobs	English Preparation	MBA News	Companies	Copyrights
IT MBA Jobs	MBA Abroad	MBA Events	B-Schools	About CoolAenues
Consulting MBA Jobs	CAT / MAT / CET test papers	MBA Placements	Summer Guidance
Resume Design Tips	MBA in India	Summers Guide	Classifieds

© All Copyrights exclusive with Zebra Networks
Part or full of the contents can not be published, copied or reproduced
in any form without the prior written exclusive permission of Zebra Networks. Pls refer to CoolAvenues Copyright section.