Why Sensex Plunged Over 2400 Points In Just Three Days

Gladys Abbott
February 8, 2018

Asian markets followed the trend with Tokyo diving more than 5 per cent, Hong Kong 4 per cent and Sydney 3 per cent, Singapore 2.3 per cent, Seoul 3 per cent, Taipei 3.7 per cent, and Shanghai 2.1 per cent.

Also, the MidCap and the SmallCap index gained 69.65 points (+0.43%) and 339.56 points (+1.95%) each, which highlights the fact that the bulls have still not given the way to bears. "Markets had gone up too fast and a correction was more than overdue".

The Sensex fell as much as 1,274 points today at day's low, taking its 3-day losses to over 2,400 points.

The Sensex has lost over 1,700 points since the Budget on February 1, which imposed a long-term capital gains tax on equities and projected a wider fiscal deficit than earlier targeted.

"Weakness in global equity markets added to the selling pressure in the Indian markets", he added. "The sell off in the U.S. has led to a global sell off", said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

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World markets, at large, are quaking and the epicentre is Wall Street. "However, towards close, market recouped some losses led by value buying on account of earnings growth expectations", said Nair.

In sectoral terms, the banking index dipped 0.43 per cent as shares of PNB, Yes Bank, HDFC Bank, Axis Bank, IndusInd Bank and Bank of Baroda shed up to 2.18 per cent. "Global markets were a sea of red and Indian markets started off with a huge overhang", Agrawal said.

According to BSE data, market capitalisation of all listed BSE companies stood at Rs142 trillion on Tuesday, which was lower than Rs155 trillion as on 30 January.

After the government proposes imposition of 10 per cent long-term capital gains tax on equity investment in Union Budget, domestic equity investors were already busy counting their money and looking to take the profit off the table before the tax kicks in from April 1, 2018.

RBI made a decision to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6 per cent in its bi-monthly monetary policy on Wednesday.

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