Disappointed foreign institutional investors (FIIs) continued their selling spree for the third day in a row on Wednesday, pulling the BSE Sensex down by another 401 points, or 2.83 per cent, from the last close. The government’s pep talk had little impact on the bourses with the benchmark index ending at a six-week low of 13,769.15 in line with global weakness and heavy capital outflows. The NSE Nifty index slumped by 123.25 points or 2.93 per cent to close at 4,078.90 from its last close.

With this, FIIs have pulled out Rs 3,232 crore (around $670 million) from Indian bourses in the last three days — after the presentation of Budget 2009-10. The Sensex has fallen by 1,144 points as investors — worried over the high fiscal deficit level and lack of any roadmaps on disinvestment and foreign direct investment — have been unloading stocks. Investor wealth — or market capitalisation — declined by a whopping Rs 3,73,000 crore to Rs 44.59 lakh crore in the last three days.

Investors’ sell-off was so aggressive that even indications of an early roadmap for disinvestment and a partial recovery in the Asian and European markets failed to influence market sentiment. Planning Commission deputy chairman Montek Singh Ahluwalia on Tuesday said the government needs more time to prepare a roadmap for its disinvestment programme and also noted that the Budget was very clear on measures for economic growth, infrastructure and public-private partnership.

The warning of global rating agency Standard & Poor’s Ratings that India’s high fiscal deficits are not sustainable in the medium term and if fiscal consolidation is delayed, there is a risk that the sovereign credit ratings on India may be lowered, also impacted the sentiment.

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