InvestorQ : Why did the Sensex correct by over 900 points on 27 January Wednesday?
Archita Jajjoo made post

Why did the Sensex correct by over 900 points on 27 January Wednesday?

diksha shah answered.
1 year ago

For now it looks like the 50,000 levels has proven to be more than just a psychological resistance or barrier for the Sensex. Just in the less than 4 days the Sensex has given up 2700 points after it scaled the 50,000 levels. Even the Nifty has now dropped below 14,000 after almost getting to the 15,000 levels.

It is interesting to note that in a year when returns were positive from the beginning, for the first time, the stock market is giving negative returns in 2021 year-to-date. On Wednesday the market came with the strain of a holiday on Tuesday. The Sensex started off in a volatile manner but eventually tanked by 938 points as traders rushed to cover longs.

There were a number of factors at play on Wednesday including the signals of a delay in the US stimulus. The big loser on Wednesday was Axis Bank dipped sharply after it announced 36% fall in profits on the back of sharply higher provisions for bad loans. Clearly, the moratorium is continuing to pinch the loan books and more may follow.

Among the other losers in the index were Titan, IndusInd Bank and HDFC Bank where profit booking and lightening of positions was visible in a big way. In fact, all the sectoral indices in the stock market were in the red except for FMCG index, which was looking more like a defensive play. The mid cap and the small cap indices were in the red with negative A/D.