Higher interest rates in the US do not necessarily coincide with capital outflows.
The contraction in M&A activity in India contrasts sharply with the upbeat global picture, much of it led by a reviving US economy.
Pakistani Prime Minister Nawaz Sharif has cancelled his visit to WEF annual meeting after a deadly Taliban attack in his country.
The 30-share Sensex dropped 298 points to end at 27,209 and the 50-share Nifty has lost 93 points to end at 8,174.
Companies from the capital goods space will under-perform.
