InvestorQ : Why did the Sensex plummet by over 1100 points on Thursday, 24 September?
diksha shah made post

Why did the Sensex plummet by over 1100 points on Thursday, 24 September?

3 years ago

On 24 September it was more of an extension of the market weakness in the market indices that has now lasted for over a week. On 24 September the Nifty tanked by 342 points and the Sensex fell a whopping 1115 points.

This is part of a much larger downtrend in the markets. In fact, over the last six trading sessions, the Sensex has lost close to 2800 points or close to 8% from the recent peaks scaled by the indices. The worst hit stories were the banks and metal stocks.

There have been a number of reasons proffered for the sharp correction in the indices. On the one hand, the correction was ostensibly driven by the rising COVID cases across the Europe and India showing no respite in the COVID numbers at over 80,000 per day.

The sentiments surrounding banks soured after many Indian banks were named by the US treasury in a slush money trail to the tune of over $1 billion. That, combined with the extension of IBC, dampened the sentiments surrounding the heavyweight banking sector.

Another important reason for the sharp fall was the surprising strength in the US dollar. The dollar strength triggered a global sell-off and Indian markets were not spared. The dollar index has rallied leading the rupee to a one-month low.

One concern is the aggressive FII selling with nearly Rs.8000 crore worth of equities being sold in just 3 days by foreign investors hinting at a sudden risk-off shift. FY21 GDP is expected at -11% and the resultant panic was evident in the VIX rising sharply to 23.5 levels.