WSJ outlines the reasons for the fall in stock prices in emerging markets like India:
Expectations that central banks around the world, from the U.S. to Europe and eventually Japan, may be preparing to raise rates more aggressively than previously anticipated. News last week that the U.S. consumer-price index rose faster than expected raised the specter that interest rates will have to climb further to curb inflation. Even the recent retreat in commodity prices has not been enough to blunt inflation fears, and since many developing countries are commodity producers, these declines have weighed on their economic outlooks.
Selling by hedge funds and other more speculative investors is aggravating emerging-market losses. These investors, who aim to lock in short-term gains, will often sell their best stocks to ensure profits and cover any losses in other positions. So a sell-off in India may cause pain in Russia or Brazil, despite different economic outlooks and stock valuations.