The interest cut by the US Federal Reserve has not made much difference. In any case the cut was considered to be too conservative and not enough. The European Union has not given any signals of its readiness to follow a similar prescription of reducing interest rates.

The International Monetary Fund (IMF) is calling for a reduction in interest rates across the globe to stimulate economic growth. Unfortunately, the suggestion cannot be acted upon easily with nations jacking up local interest rates to fight currency flights.

But all said and done these are only symbolic measures to restore investorconfidence. Investors in the US are increasingly exiting out of equity markets and parking their funds in bonds with bonds yield moving to an all-time low of below 5 per cent. But beyond these symbolic acts the world community knows that it has to restore the balance in the emerging economies and ensure openness of trade.

The latter is essential for the survival of the American economy itself. Only when such measures are not taken is the globe in danger of going into a recession. Much would also depend upon Japan willing to undertake reforms. Right now, this is nowhere in sight. Several economies in the south-east Asian region will see a serious reduction in their growth rates, quite often into negative territory. For India, the fear of dumping by foreign manufacturers will continue to pose a serious challenge for at least another year. Where does all this lead us?

Sure there is a logic in the Dow Jones moving down. But should the Sensex respond in the same measure, and why, especially when the marketsopen on Monday? The problem right now for the Indian market is close at hand rather than on foreign shores.

The proposal for the downsizing of equity component in US-64 is bound to dampen market sentiments. With FIIs being moody, investors have often looked up to UTI's trading to give buoyancy to the market. But when you look hard, UTI's downsizing should not really matter much to the other players in the market. Because it would not be a case of general unloading on the market.

By this time it is well known that US-64's exposure to commodity stocks is sizeable. It is somewhat surprising that with professional fund management UTI could not forecast proactively and reduce the exposure to commodity stocks much earlier.

Now, let us come to the prospects for the market on Monday. Let the Dow Jones react some more or settle down at the current level. That reaction is well justified. And if US investors are worried then that has its reasons. Maybe the market there will continue to remain subdued until thetrend of third quarter is seen. But continued pressure on the equity markets there will force the US investors to seek actively greener grazing grounds abroad.

There should be more funds available for equity allocation for India. This is despite the story that is now making rounds that the funds available for emerging markets would be curtailed next year by one third. All said and done, investments in India are a small portion and India may well justify the allocation of a higher ratio for itself for obvious reasons.

And take a harder look. The likely impact of the Asian meltdown on the American corporate profits has been known for quite some time. It is only the publication of figures that has actually triggered the market down there. And quite likely, the unwillingness of the Japanese to go for western-style restructuring has made matters worse.

So there is a logic in these markets going down as they did over the end of this week, when our markets were closed. But seriously, there are no reasons forthe Indian markets to go down much further. Yes, the FIIs can sell some more. But that is a poor compensation for the hits they will take in the home markets.

On the contrary, there is logic for them to stay and buy even more. I do feel this logic will unfold itself, sooner than later.

And let us look back on the recent track record of the Indian markets. HLL and Bajaj Auto spurted when the right moment came. So did TVS Suzuki and a host of pharma companies. In fact, the pharma companies have been going steadily upwards, with minor corrections in between. If these do not reflect the soundness of Indian investment, what else can.

The danger is of you imagining ghosts where there are only shadows. The shadows will pass within days and the market will be bouncing back once more. And if you did not see through this you will be the loser. Yes, let those who want to run away mistaking shadows for ghosts do so. But do not allow yourself to be scared away by the bears, who will try and press the market downagain on Monday. Their game is only to turn bulls the moment they have reached the bottom they can drive.

So my advise is maul with the bears and ride with the bulls. Just stay a quarter step behind them, that should do the trick.