So far in 2016, Indian stock indices are the 2nd worst performers among the global markets after China. Also, India’s benchmark, Sensex has underperformed and is the worst performing among all major global market indices in February, 2016.
Indian markets: worst performing markets!
In dollar terms, Sensex is down by nearly 8 percent this month. However, in local currency terms, it is down by nearly 7 percent in February. Thus, the market has extended this year’s decline to almost 11.4 percent.
Reasons behind this decline!
The foreign investors have pulled close to Rs. 16,000 crore out of the country amid the emerging market selloff, which is sparked by the turmoil in China. This has been a major reason for such a dramatic decline.
Also, aversion to riskier assets along with the disappointment over the pace of the economic recovery in India has contributed to the decline. Since August, these factors in most months have prompted foreigners to remain just the sellers of stocks here!
The scenario of major markets!
In terms of market capitalisation, India and Switzerland stood among the top 10 equity markets in the world. But, both these markets have seen decline. India topped the chart of the worst performing major market this month. While, Switzerland got the tag of the 2nd worst performer among the major markets with negative returns of around 2.3 percent.
A glimpse at outflows from overseas investors!
The outflows from the overseas investors stood at $2.54 billion this year. They also have been considered among the highest among emerging markets. Also, compared to the last year, the inflows too have weakened now. Thus, the outflows and the inflows are again putting pressure on the Indian stock market and the economy as well.
India, still a surprise underperformer!
Although most of the global markets have seen a drop this year; but still India has emerged as a surprise underperformer. It is because of the fact that India has got the tag of ‘one of the fastest growing economies’.
Now what? All eyes glued on the Union Budget!
Various market participants said that the investors will be having a close look on the announcements, which will be made in the Union Budget on Monday, 29th February. The investors are hoping for some concrete steps from the policymakers so as to boost their sentiment.
While the budget is expected to include some measures so as to revive the economy; the investors are still concerned, whether the policymakers will stick to fiscal discipline. It’s because it is not a simple scenario where they can expand the fiscal deficit and stimulate growth. Also, worries about the extension of applicability of LTCG (long term capital gains) in the stock market may keep the market on the edge.
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