Although vegetable prices have come off recently, this is typical for the time of year which has tended to see prices ease in February before rising again in April. Inflation will probably peak in the second quarter but it remains uncomfortably high and rising interest rates have the potential to slow the rate of growth and persuade investors to shift their investments from equities to higher-yielding debt.
I have to say, though, I'm not convinced that the apparent shift from emerging markets back to the developed world really does mark a significant turning point. Citigroup has analysed the periods in the past 10 years or so when emerging market share prices have underperformed developed markets and makes the interesting observation that the only two significant periods of underperformance (in 2000 and 2008) occurred against a backdrop of anxiety about the outlook for global growth. In the 2008 downturn the fall in emerging market shares was accompanied by sliding commodity prices, weakening emerging market currencies against the dollar and poor performance by emerging market bonds when compared with US Treasuries.
This time around the performance of equities is the exception because commodity prices are soaring and emerging market currencies and bonds are moving broadly in line with their US counterparts. That suggests that there are other reasons behind stock market weakness and that a continuation of the global recovery will see emerging market equities recover their form later in the year.
A 17pc pull-back in just 12 weeks is unsettling but it is par for the course with India, which is volatile even by the standards of emerging markets. In a chaotic democracy there is always something to worry about but the latest concerns about governance and rising prices should not distract from the long-term growth story.
Figures from the International Monetary Fund point to an average growth rate between 2010 and 2015 of 8.4pc, which compares with 4.6pc for the world as a whole and much less in the deleveraging developed countries. A Goldman Sachs note that crossed my desk this week summed up the long-term case: "India is the Hotel California of investment ? you can check out any time you like but you can never leave."
? Tom Stevenson is an investment director at Fidelity International. The views expressed here and at @tomstevenson63 are his own.
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