February blues for equities

The Indian market might be headed for its worst monthly drop since November 2011. In February, the benchmark Sensex is down eight per cent in dollar terms and seven per cent in rupee terms. Only Ukraine has fared worse than India among major emerging markets. The Sensex's poor performance this month follows a five per cent drop in January. Foreign investors have continued to pull money out of the Indian markets. Outflows from domestic equities are one of the highest in the emerging market region.

Overweight position of foreign investors and India's valuation premium to other markets have made the Indian market vulnerable to sharp sell-off, say experts. So far in 2016, Indian markets declined 15 per cent in dollar terms, with key sectoral indices such as banking and realty falling around 20 per cent each.