Japanese crisis impact of the on both the Indian economy and equity market to be limited in the medium to long term.
India`s exports are highly diversified across regions. Our exports to Japan accounts for little less than 2% of total exports and the share of Japan in India`s cumulative FDI inflow has been mere 4% between April 2000 and December 2010.
Japanese companies have JVs with 4 Indian steel companies.``Considering the frequency and intensity of earthquakes in Japan, we expect Japan to increase it direct investments - especially in the steel sector - in India going forward. About one-third of Japan`s Gross National Product is coming from the Japanese companies located outside Japan.
The economic loss in Japan is estimated to be around USD 200 billion, which we believe is manageable as compared to the GDP of Japan which stands at around USD 5,069 billion - compare this loss with the bail-out packages post global financial turmoil, which was more than USD 1 trillion! We believe that the global economy including Japan would be able to manage it successfully. There could be recession in Japan, but our domestic economy, which is largely driven by the domestic demand story can overcome this crisis successfully.
International crude oil prices have moderated. If crisis in the Middle East subsides, crude oil price can crash land to less than USD 90/bbl.
So at the last the Japanese crisis doesn't impact too much in our Indian economy.
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