According to Morgan Stanley (NYSE:MS), if the current sovereign debt crisis in Europe continues, we could see a massive sell-off of up to 15 percent in the markets, according to managing director and head of equities at Morgan Stanley India, Ridham Desai.
On the other hand, if things don't worsen, Desai says markets could be up by a similar percentage on the positive side.
As I don't see how things won't worsen, I expect the worst in Europe, and believe we'll see a drop in equities as the width and depth of the debt crisis emerges. We're only at the beginning of seeing a large number of banks in the region default, and countries as well.
Overall, Desai sees India outperforming other emerging markets, and this time that could be the case, depending on how deeply China responds to their inflation problems, which should cut back on growth and related imports for the country.
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