What happened in Thai and other tiger economies was pegging of $. They werre artifically holding up currency by using up their forex to peg it to Thai Baht and then the banks went bust doing this.. hope RBI does not use up its reserves doing this futile exercise... instead concentrate on exports as we will be competitive with a weak rupee.. rest leave to markets.
But about stocks.. there is a philosophy called long only funds who invest in emerging markets.. so these funds dont necessarily liquidate their holdings on a dime... and as India is still a relatively safe bet for them to have exposure in emerging markets, downside will be limited. Which other country even has a projected growth of more than 7% in todays days? But investing in Stocks is altogether another ball game.. you never know the honesty of these companies... instead investing in index funds for the long term should ideally be the mantra... there is more chancec of picking lemons in these markets than hidden gems
FIIs rushed out of Thai and South Korea for similar reasons as seen in India now. We too are a victim of Crony Capitalism like they were.
When going was good, the Govs did not make the provisions. And when tides have turn they are helpless and must make evasive maneuvers.
And when the ministry panic's they take regretable decisions, which is what they have been doing for the past year.
Posco left Orissa, Laksmi Mittal too, Walmart, Buffet.... list is long...
Coal India has reserves of Coal...yet India is importing coal.. Talk about CAD!
All examples of mismanagement.
The situation is very bad right now. Once the Elections get over in 2014, we will see the true state of affairs!
Of course, India is likely to recover because we have a huge consumer base. But, we will see a sharp spike.