You can catch the exception thrown (NullReferenceException) using a try...catch block and writing the error to the logs using LogPIACEMessage in the catch block. A great reference and example is here
If you catch the error, then I believe the context will stay "green" in ACE manager. If the error is not caught, then the context should go in error state. I would recommend using try...catch in any ACE code, and writing any exceptions to the ACE (PI SDK) logs.
If you delete an input tag, you will likely get "Object reference not set to an instance of an object" when you try to use the input PIACEPoint object. When you add input tags using the ACE wizard, the wizard automatically add code for you to initialize these PIACEPoints, e.g.
SINUSOID = GetPIACEPoint("SINUSOID")
When you refer to the PIACEPoint SINUSOID in your ACECalculations code, you will get an exception because SINUSOID is not properly initialize. e.g.
SINUSOID_2.Value = SINUSOID.Value * 2
If you want to catch this error specifically, you might want to catch the exception thrown around code where the input PIACEPoints are used in your calculation. As Barry has mentioned, failure to catch the error will cause your calculation to go into an error state.
Thank you very much for the suggestion!
Actually I had included try and catch in my code. I was testing many test cases on it but had used single catch for returning 'ex.message' i.e. for returning system exception messages.Hence I used multiple catch and handled NullRefrenceException and also provided a message to be displayed in log for tha said exception.