A dubious world record for the Sensex

Over the last two weeks, India has become the top loser among major stock market groupings in the world. The domestic market was one of the top ten losers just two weeks ago.

Sustained selling has seen the Sensex and Nifty fall more than any other major non-sectoral index in the world during the global correction that set in by around May 10.

According to data with the Business Standard Research Bureau, since May 23, when the stock markets around the world got a temporary reprieve, the Sensex and Nifty have overtaken the national stock barometers of Egypt, Russia, Turkey, Argentina, Brazil and Austria to top the losers' list in percentage terms since May 10.

As of Tuesday, domestic markets are the biggest losers not only in Asia, but among emerging markets in general and of course, the developed markets.

Domestic markets have overtaken even Russian market, which had seen nearly double the run-up during the year-long bull run.

While Russia's Moscow Times, which had surged nearly 170 per cent in a year as against the Sensex's 96 per cent, has fallen only by around 22.6 per cent since May 10, the Sensex has lost nearly a quarter of its value.

"Reasons for Indian sell-off have more to do with liquidity concerns than apprehensions of the negative impact that an economic slow down may have on our exports," said Abheek Barua, chief economist for India with ABN Amro Bank NV.

While fresh hawkish voices on US interest rates overnight led to one of the biggest selloffs in export-dependent economies of South Korea and Japan on Tuesday, Indian indices to witnessed a sharp four per cent decline on Tuesday.

"Even though the correction has been very steep, I don't think we are through with it yet," Barua said. "The global markets had factored in a pause from the US interest rate hikes in June. Till that question is settled, volatility will continue in India," he said.

He said unfavourable balance of trade, which has caused the value of the rupee to be dependent on foreign investment flows, and the prospect of rising interest rates in Europe, Japan and the US constraining the availability of funds for overseas investment are likely to be major drivers for continued negative sentiments on India.