What led the Sensex lower by 1069 points on Monday 18 May?

The benchmark Sensex corrected 1069 points on Monday after the markets were disappointed by the stimulus package. However, the big reason was the IBC suspension for a period of one year. The big hit came from banks, financials and auto stocks. The extension of the lockdown and fears of a real compression in consumer demand were high. The biggest concern for banks was the 1-year suspension of insolvency proceedings which would leave the banks with little by way of firepower in the case of defaults. The rapid rise in the number of Coronavirus cases has also been a major dampener. Goldman has projected a negative growth of (-5%) in FY21. That is unlikely to keep markets too happy.