Sensex falls as China’s equity markets continue to tumble

Despite fears foreign institutional investors (FIIs) would book some profits after a two-year rally in shares, analysts say India could fare better than other emerging markets given optimism about the domestic economy and subdued inflation.

“We are not isolated from the global turmoil but the internal factors are not very bad for India and FIIs are selling because of global play,” Alex Mathews head of research at Geojit BNP Paribas said.

The benchmark BSE index was down 1.45 percent at midday after earlier falling as much as 1.7 percent to its lowest since Aug. 8, 2014. The index had started the session with gains of as much as 1.5 percent.

The broader NSE index was down 1.52 percent after earlier hitting its lowest since Aug. 12, 2014.

FIIs held about 25 percent of India’s stock market capitalisation as of March, according to a report by investment bank Kotak.

All sectors were trading in the red with the exception of resources stocks. Pharma and IT stocks were the biggest drags on the index with Sun Pharma down 3 percent, Lupin down 3.9 percent, Infosys down 3.5 percent and HCL Tech down 2.3 percent.

Meanwhile, Coal India was up 2.7 percent; BPCL and Cairn India gained 1.2 percent each receiving a boost from the fall in crude oil prices.