Containing the global credit crunch in order to prevent liquidity dry up has been the main object of the capital market regulators in the US and elsewhere, whereas in the emerging markets, the opposing trend prevailed. Rising inflationary pressure, buoyant liquidity, large capital inflows from FII’s, triggered monetary stabilizing to curb inflation and absorb excess in the system liquidity that has been the priority of the central bankers and market regulators. Within these purview, we have seen the remarkable performances of the emerging market stocks. Though the equity markets continued to be volatile, yet they returned spectacular performances with the Chinese and Indian shares rising by 85% and 40% respectively. In fact the Indian BSE Sensex and the Shanghai SCI 300 have seen one of there best performances as both bourses went up record level. So here we are in the stock market boom in the emerging markets. Compared to the developed markets, emerging stock market performance has been better than their counterparts. Year to date gain in S&P 500 is only 4.66%, the London FTSE-100 rose only 3.4% and the Tokyo Nikkei dropped around 12%. Current return from the Indian equities have been around impressive 16%-18%, indicating the volatile trend the Sensex went through. The Morgan Stanley Capital International-Emerging Markets (MSCI-EM) rose 33.24% in 2007, showing an impressive emerging market growth trend.

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