Geopolitical turmoil

This refers to the Editorial ‘Turbulent times’ (August 6). Multiple factors have led to the mayhem in global stock markets, including the Indian market, though to a lesser extent. Geopolitical issues have significantly contributed to this downturn, with fears of a US recession and rising unemployment being key factors.

Timely decision-making by US regulators is crucial, as most global economies, including India, react to changes in US policy measures. The inflow and outflow of funds from foreign investors influence the trajectory of USD-INR exchange rates and stock market indices.

India has the capability to decouple from adverse global developments due to its vast consumer base. However, government and central bank policy measures should focus on strengthening the middle class to insulate the economy from global upheavals.

Srinivasan Velamur

Chennai

US economic cues

Following an indication from the US Federal Reserve on Wednesday about the possibility of a cut in interest rate in September, the Dow Jones index rose to the cheers of investors.

However, things moved south in stock markets across the globe with the data released by the US Bureau of Labour Statistics, raising fears of a deterioration in the labour market and the possibility of recession.

It is clear now that global markets are now wary of risks stemming from the Bank of Japan raising interest rates and fears of conflict escalating in the Middle East. While acknowledging the fact that immediate triggers for the fall in the Indian stock markets appear to be largely external, concerns over the valuations in parts of the Indian stock market, especially the small and midcap segments, cannot be simply overlooked.

M Jeyaram

Sholavandan (TN)

Surrogate ads

With reference to the news ‘India plans to clamp on surrogate advertisements on liquor’ (August 6), the government is set to announce a set of sweeping rules that will ban surrogate advertising that liquor brands use to market their products.

Since direct advertising of alcohol is banned, the major players have been relying on surrogate advertisements by showing items such as water, music CD or glassware. The new rules if passed could have a significant impact. They would also extend to sponsorships and advertisements for products. However, within the changes coming in, the marketing companies will have to engineer a new approach.

P Victor Selvaraj

Palayamkottai (TN)