As dollars swirl out of pandemic play and into beaten down sectors like energy, which is fuelling inflationary concerns in the US, Dalal Street has caught some of the jitters. Companies that operate
, and online insurance platform Policybazaar have seen their market capitalisation fall precipitously from richly valued IPOs less than a year ago. The market is reassessing startups that have been chasing customers at the cost of profit as a benign interest rate cycle approaches a point of inflection.
US Federal Reserve chair Jerome Powell has indicated monetary tightening will begin earlier than anticipated. IMF chief economist Gita Gopinath has voiced her concern over undue haste by central banks to dial back their pandemic support. In 2013, emerging markets like India faced the brunt of a ‘taper tantrum’ as rising US treasury yields spooked investors into liquidating offshore holdings in a flight to safety. Gopinath argues convincingly the pandemic has been particularly hard on middle-income countries and they can’t afford another tantrum by markets that pushes up borrowing costs.