The later, the worse: Fears at home & abroad send Sensex crashing

If the world markets are a coupled entity, correction is country- and time specific. So even as the January-February results season saw earnings per share (EPS) of Sensex companies rise by 8%, the coupled nature of markets have pulled the Sensex down by 25%, taking its PE multiple down by 32% from a scorching 28.4 to 19.4. The 4.8% fall in the value of the Sensex to 15,357 today (See Page 21) has to be seen in this context.

Days or months is too short a time to ascribe clear reasons for a market fall, but the fact remains that India stands next only to China in this global crash. Between January 11 and today, it has fallen by 25%, next only to China's 27.6%.

Flashback to November-December 2007, when the global meltdown began, and the India decoupled story stood strong: as emerging markets fell by 10-12% during the period, the Sensex actually rose by 5%.

The reason then ascribed to Sensex as the last index standing was that the Indian economy does not rely on exports and is more dependent on internal factors - strong domestic consumption, growing infrastructure. In the current fall, these facts have all but disappeared.

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