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India and Indonesia: Not so bad after all?

Last year, they were the two emerging markets in Asia not to touch with a barge pole. Yet for India and Indonesia, a few months appears to have made a big difference.

The two countries have come off relatively unscathed in the latest bout of volatility to hit emerging markets amid a scaling back of the U.S. Federal Reserve's monetary stimulus and worries about the global growth outlook following weak data from the U.S. and China.

(Read more: Is Indonesia's rosy growth a flash in the pan)

Retail store in Rajouri Garden, New Delhi, IndiaRavi Sahani | The India Today | Getty Images

While not out of the woods yet, India and Indonesia have made progress in convincing investors that they will do whatever it takes to rein in wide current-account deficits and get their houses in order, analysts say.

Both countries have raised interest rates sharply since the second half of last year, when heavy selling in emerging markets first took hold. Other measures such as restrictions on gold imports in India to help bring down the current account deficit have also helped boost sentiment.

"We are now in an environment where we can see lots of idiosyncratic differences in the countries. Asia for me is standing out versus other parts of the world," Hayden Briscoe, director of Asia Pacific fixed income at Alliance Bernstein, told CNBC earlier this week.

"Indonesia is one we have a brighter light on compared with other countries," he said. "They have gone a long way to improving their productivity, so we're looking to put some money to work there either in the bond market or currency."

(Read more: 'Fragile Five' face low risk of full-fledged crisis: Roubini)


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