Half a year after India's worst economic crisis since 1991 reduced the rupee to record lows, a government in the last months of its life faces a new moment of truth as emerging markets again show signs of buckling.
This time round countries such as Argentina, Brazil, South Africa and Turkey have been in the firing line.
Investors are less downbeat over India, thanks to actions taken since its mauling by the markets last summer.
"From an FX perspective, a lot of adjustments that had to happen have been made," said Joel Kim, head of Asia Pacific Fixed Income at BlackRock Inc in Singapore. "Particularly, the adjustments in the rupee and balance of payments make us feel a lot more comfortable with exposure in Indian bonds."
Blackrock, the world's biggest fund manager, now calls Indian bonds one of its biggest overweight positions in Asia.
Uncertainty still abounds over India on several scores, however, notably the outcome of a looming election and questions over whether monetary policy will give more priority to stifling inflation rather than bolstering economic growth.
To batten down for the gathering storm in emerging markets and counter inflationary pressures, the Reserve Bank of India raised interest rates by a quarter percentage point on Tuesday, its third such move in five months.
The calibrated response showed a steady hand, and stood in contrast to the dramatic increases in key interest rates announced overnight by Turkey to protect its crumbling lira currency.
India, unlike Turkey, has slashed its current account deficit and built up currency reserves over recent months to protect itself from a repeat of last year's crisis, when the rupee was battered by a global sell-off, as investors fled economies with weak external balances.
Then, as now, the markets turned on expectations of how fast the U.S. Federal Reserve will wind down easy money policies that had helped drag the U.S. economy out of recession and provided money to invest in high-yield emerging markets.
Policymakers say they are confident that India can ride out the latest bout of global volatility, though foreign investors have sold heavily in the last few days. Other countries have suffered far more in the latest shake-out.
"PUTTING HOUSE IN ORDER"
Until the global rout struck, overseas investors had been buying India, building positions in equities. January was set to be the second consecutive month of net purchases in bonds.
Since Thursday, when weak manufacturing data in China sparked a stampede out of emerging