A falling rupee, a sell-off in the benchmark Sensex index and jitters ahead of next month’s state election results had already made it a poor year for Indian financial markets, but this week’s tragic events in Bombay have only deepened the gloom. The forthcoming Indian winter looks harsh indeed.

But the fall-out from what might once have been viewed as the domestic difficulties of Asia will be felt in London, too. Not least because Indian companies now make up a sizeable proportion of AIM, London’s junior stockmarket.

Indeed, an appetite among European investors to tap into India’s rapid economic growth has meant that companies from the subcontinent have continued to float on AIM when others have failed to find funds. Four Indian companies have joined the market in the last few months alone: Indus Gas, Mortice, the property company, KSK Emerging India Energy Fund and OPG Power Venture.

Now, even that source of support is set to weaken.

But as Seymour Pierce points out, Indian companies retain clear attractions ahead of AIM’s other overseas constituents. Most of them boast strong balance sheets. For example, of AIM’s 24 Indian companies, only 7 carry net debt, Even better, all but 5 of them are profitable, which means their future cash requirements should be modest. That implies they should suffer less from the worldwide liquidity squeeze than their share prices might suggest.

But the old adage about overseas companies listed in London - the further away they are from the City, the greater the discount at which their shares should trade - still seems to hold.

That means that expecting AIM’s Indian constituents - which have more than halved in value on the year - to reverse their slide anytime soon might be premature.

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