The current consensus on India is very deprssing, and it is difficult to find a real bull among major market participants. Almost everyone is underweight India in a regional or even broader emerging markets context and we have already seen outflows of more then $7 billion.

Trading volumes have collapsed, investor visits reduced and the hype around the India story almost totally dissipated. Analysts trying to market the India story keep reporting total disinterest among the investor base, and raising new money for India is extremely difficult.

With such a sea change in sentiment it would be helpful to remember "how we got here in the first place". While financial markets globally are in turmoil, India has had some specific issues.

The India story got derailed for three or four main reasons:

Inflation spiked and forced the RBI to tighten aggressively, effectively choking growth and hitting corporate profitability. Growth expectations had to be revised downward for the first time in five years.

The unanticipated surge in oil prices blew a huge hole in both the fiscal and current account;

Wrong valuation with high expectations and there was excessive hype.

The government in its desire to get re-elected began to pursue suboptimal policies; viz. The farm loan waiver, higher than recommended pay hikes, industry level price controls, inability to cut subsidies, etc.;

Now low rainfall also fails indian economy in big way. Price may rise more.

GOOD SIGNS:

First of all, we will have a new government in place with hopefully a five-year term. As per previous performances and reform policy we can expect good future.

New tax policy may reduce the burden of High price and help people for more money for investment.

Now gove is more or less with free for large coalition. Given the disappointment on this front in the last four years, any policy action will be a Good.

Next elections are far so more responsible is government economic decision making.

  Inflation will be around 6%. With inflation under control RBI will be about to commence an easing cycle and in last few months we have seen the new policy for the same.

Major concern of new Govt is the putting growth on track rather just manage inflation. GDP is also more important for market stabilization.

GDP growth will start accelerating and we should exit the year at an 8 per cent trajectory again.

Thirdly, independent of where oil prices go, the year ending March 2009 will mark the peak in India's macro-economic vulnerability to rising oil prices.

At 9 per cent of GDP, oil imports will naturally drop to below 6 per cent.

In next 6-12 month, we can expect the visible growth and stock market catch up.

India is in better off the the other country as far as slow down is concern and stock market India is now almost stable or at least not dropping in large.