"When Wall Street sneezes, the rest of the world catches a cold."
The heightened volatility in the week of 5-9 February 2018 took down the S&P 500 index and the DJIA by 5.2% each. Spooky perhaps, but still a decent outcome especially when the 2018 to date loss of 2.0% for the S&P 500 and 2.1% for the DJIA are viewed relative to their 19.4% and 25.1% appreciation in 2017.
Just as expected the rest of the world caught a cold, topped by the 9.6% drop in the Shanghai Composite index that week with the Jakarta Composite index suffering the least, down 1.9%.
However, accounting for year-to-date performances, Indonesia's stock market tops the charts with a still positive 2.4% return, Italy's plus 1.4% followed and then Malaysia's 1.3%.
India's Sensex-30 index is down slightly - minus 0.1% - but this masks the fact that the Indian equity market has outpaced 'em all in 2017 (even the S&P 500 and the Dow).
Last year's performance figures show the Sensex-30 index surged by 27.9% - outperforming the equity market returns in China (6.6%), Indonesia (20.0%), Malaysia (9.5%), Indonesia (13.7%) and Italy (13.6%).
It therefore came as no surprise when the Reserve Bank of India (RBI) kept policy steady - repo rate at 6.0% and reverse repo at 5.75% - when it met on the February 7 (right in the midst of the upheaval on Wall Street).
In fact, one monetary policy committee member voted to increase interest rates by 25 basis points. This is because although there's no doubt about the Indian economy's growth trajectory, the same growth risks putting upward pressure on inflation.
India's GDP growth accelerated to 6.3% in the year to the third quarter from 5.7% in the previous period. While the RBI revised down its growth estimate for the current fiscal year (ending March 2018) from 6.7% to 6.6%, it anticipates growth to pick up to 7.2% in the next influenced by positive factors:
"First, GST implementation is stabilising, which augurs well for economic activity. Second, there are early signs of revival in investment activity as reflected in improving credit offtake, large resource mobilisation from the primary capital market, and improving capital goods production and imports. Third, the process of recapitalisation of public sector banks has got underway."
There's good news on inflation too with the annual rate of growth in consumer prices slowing to 5.1% in the year to January from the 17-month high of 5.2% in the previous month. The RBI predicts inflation of between 5.1% - 5.6% in the first half of FY 2018-19 before slowing to 4.5% - 4.6% in the second half.
These are both below the 4.0% plus or minus 2.0% target, giving the RBI scope for easing policy should Wall Street's volatility goes on for longer and the India's economy catch a cold.