From various sources it has been noted that there would be Global crisis again. Lets see will India be able to combat this time or not ? There are signs of collapsing of Stock markets. Various reasons have contributed towards the down fall in credit rating of the United States from AAA to AA+ and global markets is in the red zone again.

In 2008, the Sensex had crashed close to 58 per cent from its peak of 20,827 on January 11, to 8,701 points on October 24. And this time the Bombay Stock Exchange, or BSE sensex get down to over 315 points or 1.82 % on August 8.

Some of the factors that are showing signs of economic crisis has been listed. Since 2008, India’s GDP growth rate has fallen. Instead of lower inflation, real rates are much higher. Unlike in 2008, the government’s fiscal health is not in great shape. Capital inflows in 2011 are lower than in they are in 2008. “India’s current account balance is not that different, and hence dependence on capital flows remains intact,” says Ridham Desai, Strategist and Head of India Equity Research at Morgan Stanley, in a research note.

But as for now, there is no reason to panic as said by experts. The sensex crashed in 2001 due to Twin Towers terrorist attack in the US in September 2001. But in the next three years it went on to generate a smashing 84 per cent return. The sensex also saw a downfall during June 2004 general elections, But it climbed back, providing 200 per cent returns in the next three years.

“The message is simple,” says Prashant Jain, Executive Director and Chief Investment Officer of HDFC Asset Management Company, in his latest newsletter. “If growth persists and if price to earnings is low, equity returns cannot be far, at least not too far.”

India should fare better this time because of moderate valuations, muted foreign institutional investor, or FII, inflows, and significant under-performance versus the region. Indian equities have fallen sharply this year compared to other emerging economies, notes Boston-based Punita Kumar Sinha, Senior Managing Director at Blackstone Asia Advisors.

However, India is the only market which has got positive FII inflows this year along with Indonesia. But the inflows are low compared to last year. Besides rising interest rates and higher commodity prices, the other concern is corporate earnings. Corporate earnings in the last two quarters have not been that impressive, and there has been pressure on margins and a drop in volumes.

“India is not cheap at current valuations,” says Sinha. “The big problem in India is the divergence between quality stocks which are not cheap, and others. Stocks in sectors such as real estate and infrastructure, where growth is uncertain, are cheap, but consumer-oriented sectors are still expensive.”

Since the dampening factors are understood this time than they were in 2008, there is no major reason to expect a double-dip.