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.

The high government borrowing and its impact on interest rates also made investors jittery. Investors turned wary about financial stocks on concerns heavy government borrowing could harden bond yields and erode profits of banks, who are the biggest buyers of government paper.

Analysts said corporate earnings will be the next driver for the market in the short term. Though results are expected to be better than the previous quarter, for a longer rally it depends on how the government takes the growth momentum forward. Infosys Technologies is expected to report on Friday its quarterly earnings rose 7.3 per cent on year.