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, India
Ravi 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)

Indonesia's fiscal situation is improving: Fin Min

Indonesia this week posted its third straight monthly trade surplus in December and at $1.52 billion, the surplus was the biggest in two years. Southeast Asia's biggest economy also surprised markets on Wednesday with better-than-expected fourth-quarter economic growth data.

India meanwhile delivered an unexpected interest-rate rise last week, a move seen by analysts as a pre-emptive strike against inflation.

"We expect India will continue to struggle with persistent inflation, current account and fiscal deficits, and a slow pace of reforms," Wells Fargo said in a note on Thursday. "However, we believe the worst of these troubles has passed and appropriate measures will be enacted to combat these issues."

While the Turkish lira sank to a record low and the hit a five-year low last week, the Indian rupee and Indonesia rupiah have been relatively stable.

The rupee, which hit a record low against the greenback last August, is down just 1 percent this year to around 62.52. The Indonesia rupiah, which slid 26 percent last year, has been stable around 12,170 per dollar.

(Read more: Indonesia Finance Minister: No deficit issue in 2014)

Indonesia's stock market meanwhile has outperformed other members of the fragile five big emerging market economies that also include India, Brazil, Turkey and South Africa, with gains of 2.6 percent this year. In contrast, Brazil's stock market is down 9.5 percent.

"You've got to be selective, it's [emerging market volatility] not going to hit all of them, so you have to look at strong models with strong policy and strong balance sheets," Medha Samant, investment director of Asian equities at Fidelity Worldwide Investment, told CNBC this week.

— By CNBC.Com's Dhara Ranasinghe; Follow her on Twitter @DharaCNBC