In today’s Intra-trading session, Sensex plunged by 1100 points, and thus hitting the day-low of 35,993 points. Nifty too lost more than 400 points and crashed below 11,000 mark. This was a dramatic crash where investors went on a selling spree amid volatile cues. Let’s find out more about what happened and what all can be expected from this correction in the future.
Table of Content
What Happened During the Trade Session Today?
A large volatility was experienced during the session today, thus leading to several indices closing on a negative note. The day began on a strong note as strong opening of the rupee and good global cues boosted the sentiments. But a sell-off in the afternoon led by 50% fall in the stocks of Diwan Housing Finance and Indiabulls Housing caused the market.
With management of these NBFCs to cushion fear sentiments and dismissing report of debt defaults, the market situation improved a bit. The rout came in the small cap and mid cap indices, which were down 3.7 per cent and 2.5 per cent, respectively. Pharma and PSU bank sub-indices also lost closing to 2% each.
What were the Reasons Responsible for the Same?
- The market analysts pointed towards the crisis in IL&FS, an infrastructure finance conglomerate to be one of the reasons of the crash. IL&FS is facing severe liquidity crunch these days and has recently been defaulted on repayment of Rs 100 crore.
- The trigger on the surface seems to be the selling of debt papers of DHFL by DSP MF which is one of the prominent AMCs, but the broader issue is that of a contagion leading to selloff in papers of other companies.
- Besides, falling rupee and global cues added to the decline.
How Is D-street Reacting to the Sharp Fall and Recovery of the Market?
Experts of the market believe that NBFCs seem to be a falling knife and it makes sense to stay put at this point. Overall, the sentiments were sour and it is better to wait and conserve the cash. One can expect to see more volatility in the coming weeks.
Some market experts have stated that there was a lack in the fundamental reason for the fall that happened in the market today. It could rather be due to some technical factors.
Who were the Biggest Gainers and Losers?
- Considering the sectors, Banking & Financial Services and Food & Beverages were the biggest losers today which changed -2.95% and -2.88%, respectively. This was followed by miscellaneous sector, retail & real estate, and utilities segment which changed -2.29%, -1.88%, and -1.71%, resp.
- When it comes to stocks, Dewan Housing, Yes Bank, Karda Constructions Ltd., Infibeams Avenues Ltd., Crest Ventures, and RPP Infra Proj were the biggest losers.
- The list of top gainers include IFB Industries, Phoenix Mills, Just Dial, Centum Electronics Ltd., and Va Tech Wabag Ltd.
What Can We Expect in the Future?
Experts still believe that the markets are extremely overvalued, and therefore a correction is certain in the coming weeks as well. The Sensex is expected to drop by 2000 points from here. Nifty too can correct by around 1000 points. There is no major change in the macro-economic situations, but when a sell-off occurs, no one can predict what it can bring. It can be a good opportunity for long-term investors to invest in if they strongly believe that a particular fund has invested in companies with solid management. To seek recommendation during this time, connect with the experts at MySIPonline.
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