The writer has stated that reinvestment is likely to be in assets that are considered safe and will also happen at more prudent valuations ans that these should include mainstream companies, growth stocks, growth markets like India and China, moderate to high safety assets and conventional financing for viable projects - that being the case we should be finding more steady inflows from the FIIs leading to stabilization of the markets in the short term. The author rightly mentions that the dependence on the domestic rupee resouce will increse - this in turn should lead to strengthening of the rupee mainly vis a vis the dollar. Indian markets had drifted from their fundamental valuations as a result of the liquidity driven over-valuations and hence the current corrections. Sub-prime is a contributing factor and not the the sole reason as is being made out. The central banks effort in decreasing liquidity is a step in the right directions and not a wee bit too late.
