Investors have been sanguine about tapering: Arvind Sanger

In a chat with ET Now, Arvind Sanger, Managing Partner, Geoshpere Capital Management shares his views on market.

ET Now: But the bigger question, just to stretch the point that you were making earlier forward, the bigger fear in emerging markets were what would happen once tapering starts, whether or not we are going to see a big retracement of funds from emerging markets and that pretty much is the concern with India as well because we have other problems too, high inflation we have got looming general elections as well coming in next year, could that be a problem for India though?

Arvind Sanger: Investors in the last few days and weeks as a follow-up have been much more sanguine about taper than they were back in May-June-July when they seemed in August when they seemed unprepared or under prepared for what the implications of taper. One of the good things that happened is by having the child run or child balloon last summer, investors got more comfortable with the implications of taper and the implications of taper are not any sharp withdrawal of liquidity. The implications of taper are gradual reduction in the amount of liquidity being pumped in but that is not causing money to suddenly leave. It is just that incrementally there may not be as much money coming in every month as there was but that is not causing capital flight of any sort and I do not expect capital flight but I do expect that as the amount of liquidity available becomes moderately less going forward, investors will have to be more selective of where that liquidity goes. So, I do not really see that same fear of the liquidity flight being as prevalent but clearly if any country does stumble, they could be disproportionately hurt in a market in which tapering is taking place.