FII pullout takes heavy toll; Indian stock indices world’s 2nd worst performers after China so far in 2016

MUMBAI: Indian stock indices are the second-worst performers among global markets after China so far in 2016. The Sensex has fallen 11.2% since January as foreign investors have pulled close to Rs 16,000 crore out of India amid the emerging market selloff sparked by the turmoil in China.

Analysts said aversion to riskier assets and disappointment over the pace of economic recovery in the country have also prompted foreigners to remain sellers of stocks here in most months after August.
On Tuesday, Indian shares dropped, mirroring the weakness in rest of Asia, after four sessions of gains as investors turned nervous ahead of the Union Budget on February 29.

Market participants said investors will be closely watching the announcements in the Budget, which is expected to include measures to revive the economy. Investors, however, are concerned whether policymakers will stick to fiscal discipline. Worries about extension of applicability of long-term capital gains in the stock market may also keep the market on the edge.

Sensex dropped 378 points, or 1.59%, to close at 23,410 on Wednesday. Nifty declined 125 points, or 1.73%, to end at 7,109, sharply below its psychological support level of 7,200. Asian shares retreated from seven-week highs as the recent crude oil rally that boosted global equity markets reversed on renewed worries about a supply glut.

Foreign institutional investors sold stocks worth Rs 289 crore on Tuesday while their domestic peers bought shares amounting to Rs 257 crore.