NEW DELHI: China’s central bank sought to calm jitters, asserting over the weekend that the rout in the country’s equities market is coming to an end. It also underlined that there was no basis to any long-term depreciation of the yuan. Do the developments in China come as a good news for Indian markets? It is difficult to rule out further declines in Indian markets, but if what China’s central bank says comes true, it will definitely curb volatility across markets. Devaluation of yuan was a one-off event, but what fuelled nervousness across markets was the fact that the world’s second-largest economy is showing signs of a slowdown. The S&P BSE Sensex has slipped over 10 per cent since August 11 when China devalued its currency by about 2 per cent. China’s SSE Composite index has slipped nearly 19 per cent in the same period. So, if global volatility does come down, India would definitely bounce back, say experts. “It appears portfolio managers are selling India or whichever market is liquid to meet redemption pressures in their funds,” says Nirmal Jain, founder and chairman at IIFL Group, in an interview with Economic Times newspaper. “We believe when the recovery happens, India will be one of the fastest markets that will see an upside. However, right now, there is general risk-aversion towards EMs and India being in that pack is also getting affected,” he added. State intervention in the equity market prevented systemic risk and stopped the free-fall in shares, People’s Bank of China Governor Zhou Xiaochuan said in a statement on the bank’s website on Saturday. The surprise devaluation of the yuan by China in August rattled markets across the globe, and recent downbeat data raised the risk the government could miss the full-year growth target. China on Monday revised its annual economic growth rate in 2014 to 7.3 per cent from the previously released figure of 7.4 per cent, the National Bureau of Statistics said. Gross domestic product stood at 63.6 trillion yuan ($10.00 trillion) last year, down by 32.4 billion yuan from the initial estimate, the bureau said in a statement on its website. Given the unpredictable headwinds globally, will India remain insulated? The answer to that is ‘NO’. Industry body Assocham in August warned that any further move by China to devalue yuan could result in a “full-fledged currency war” among the world economies. For India, the devaluation could mean “triple whammy” in the form of rise in rupee volatility, exporters facing more competition and China dumping more goods into India, it said. The world has changed and things are much more globalised now. “Can India remain isolated with what is happening in the world? Yes, on a relative basis, our positioning is better, but the spill-over effect will clearly have an impact on us as well,” says Vijay Kedia, MD, Kedia Securities. Does it spell good news for India? – Yes, for investors According to experts, the 10 per cent correction in the past month or so has made India market attractive, as value has emerged. The correction was largely on account of sharp selling by global emerging market funds to meet redemption pressure in their funds. The overall story for India still remains intact, and once things settle down, India would emerge as one of the best performing markets, say experts. While it will be a tough time for traders, investors should use these dips to go long on markets for a period of over 1 year. Gautam Sinha Roy, VP Fund Manager, Motilal Oswal AMC, is of the view that the damage to Indian markets is mostly ‘collateral’ because of weakening of global equities. Even within the global equity pack on a one-year basis, India would be among the better ones, he added. Vijay Kedia of Kedia Securities is of the view that value is there in India markets. The market is cheap, but it may fall another 5% or 10% from here, he added. The Indian economy has seen a number of positive developments in the last year and a half. Softening of inflation due to a fall in commodity prices, RBI’s accommodative policy, governments push for infrastructure spending, subsidy rationalisation and focus on getting key reforms in place are some factors which have kept sentiment intact. Domestic institutions and Mutual Funds have been net buyers of Indian equity markets at a time when foreign institutional investors were dumping stocks. Overseas investors have pulled out Rs 17,555 crore ($2.65 billion) from the Indian capital markets in August. Mutual fund managers purchased shares worth a staggering Rs 10,533 crore even though overseas investors pulled out a record amount of money from the stock market. “If you have cash, it is time to deploy selectively because a lot of stocks have come off quite significantly over the last one month or so. Many of the largecaps have come off 15-20% and it is not as if much has changed for some of names like NTPC, Power Grid, etc,” says Sanjeev Prasad, senior ED & Co-Head, Kotak Institutional Equities, in an interview with ET Now. “Watever is happening in the rest of the world or even in India, I see some value emerging. People are still holding on I guess to the defensive part of the portfolio, which is consumer, IT, pharma. If you look at the valuation gap between the defensives and the cyclical, that has become even more stark now,” he added. Prasad is of the view that it is time to selectively start looking at some of the good-quality cyclicals that have come off significantly.