– Global markets experienced a significant sell-off, with Japan’s Nikkei experiencing its largest one-day fall since 1987
– The sell-off is attributed to the unwinding of the yen carry trade, where investors borrow in low-interest rate countries and invest in higher return assets
– Bank of Japan’s interest rate hike and bond tapering plan have strengthened the yen, making the carry trade unprofitable
– Fears of a US recession and geopolitical tensions are also contributing to market volatility
– Dalal Street in India can expect volatility due to yen carry trade unwinding, with Japanese investors being significant players in the market
– Domestic institutional investors may provide some cushion, but global risk-off sentiment could impact liquidity and the value of the rupee