Why Did Sensex Fall Over 1100 Points Yesterday?

In India, Sensex is the BSE’s benchmark index.

The Sensex index is made up of 30 of the BSE’s largest and most actively traded equities, it is indeed an indicator for the Indian economy. It is market-capitalization-weighted and float-adjusted. Between June and December, Sensex is re-evaluated twice a year. The Sensex is India’s oldest stock index, having been established in 1986 by Standard & Poor’s (S&P). Analysts and investors use it to track India’s economic cycles including the growth and collapse of certain sectors.

Sensex falls by 469.60 points, Nifty follows by 118.05 points - Dalal  Street Investment Journal
Understanding the Sensex:
On January 1, 1986, the Sensex was launched. It is a bellwether index including an investable index that tracks the performance of India’s 30 largest and most financially healthy corporations. These businesses include listed on the BSE ( Bombay Stock Exchange is another name for it) and represent some of India’s largest and most important industries. As a result, it is India’s most closely followed index.

The Indian rupee (INR) and US currency (USD) are used to compute the Sensex. As of August 31, 2021, the index’s mean total market cap was 3.71 trillion rupees.

The BSE SENSEX (S&P Bombay Stock Exchange is another name for it. Sensitive Index or just SENSEX) is a market system stock market index that tracks the performance of 30 well-established and financially businesses with a proven track record on the Bombay Stock Exchange. The 30 companies that make up the index represent a variety of industries in India’s economy and they have been one of the country’s largest and most often traded stocks. The S&P BSE SENSEX, which debuted on January 1, 1986, is considered the pulse of India’s local stock markets.

The BSE undergoes periodic reviews and changes its major aspects to ensure that it accurately represents current market realities. The free-float capitalization approach, a variety on the market inscription approach, was used to generate the index. It employs the float or shares that are readily available for trading, rather than the number of remaining shares in the corporation Total capitalization minus Directors’ shares are free-floating capital.

According to the float method of capitalization, the level of the index time represents the free-float market value of 30 constituent stocks relative to any specific time of departure.

The price of a company’s stock is multiplied by the number of shares causes a result of the company’s operations, which is a consequence of the instant replacement of scrips, to establish its market capitalization.

From June 1990 to the present, the index has climbed more than twenty-five times. The long-term return on investment on the S&P BSE SENSEX is 18.6 percent per year, based on data from April 1979 onwards.

Big Sensex falls in 20 years and market reaction to other viral outbreaks -  The Economic Times

On the derivative expiry day, Sensex lost almost 1100 points to 59,984 units, while Nifty fell over 2% to 17,857 points. Banking stocks led the way down, with SBI, HDFC Bank, ICICI Bank, Axis Bank, and Kotak Bank all dropping between 3% and 4%, while ITC fell more than 5%. The increase in India’s key stock indices this year, fueled by tremendous liquidity and widespread market involvement, has sparked concern about overvaluation.

Because valuations are so expensive, Morgan Stanley downgraded Indian stocks to equal-weight from overweight today, and said it expects the market to stabilize ahead of potential “short-term challenges.”The shares of Nomura and UBS have already been lowered there too.

According to experts, FIIs’ relentless selling is a critical cause in the market’s current drop. In the last five sessions, FIIs have sold nearly 10,000 crores in Indian stocks.

There there is a lot a feeling of passion for values in some sectors of the market. “There is still money to be made in some places,” said Saurabh Jain, executive vice chairman of SMC Securities. “This will result in some sectoral upheaval.” The pressure had an impact on the broader markets, with the BSE midcap and smallcap indices tumbling by about 1.5 percent.

The first deliberate downturn in the sector has happened, with the Nifty falling below its 20-day moving average, allowing for more downside, the next support level will be the rising 50-DM, which may coincide with the gap places in the chart, around 17650 level, while below this the gap places will be the next support level, 17450-17250 will be the next support zone,” Swastika Investment’s Head of Research, Santosh Meena, stated. “On the bright side, between 18150 and 18300, the location was converted into a commercial powerhouse.”

“Amid costly valuations, inflation and a slowing of global growth momentum are further concerns. The emergence of new covid cases in several regions has investors concerned. We are in a structural bull market with intermediate declines ahead, and these types of corrections will present strong buying opportunities in quality equities,” he noted.

Today, the Nifty Bank sectors index slid 3.3 percent to 39,508.

Sensex falls 699 points to end below 27,000; Nifty below 8,300 | Business  Standard News
In addition, the Bank Nifty is showing that it may have touched its all-time high at 41500. On the downside, 39250 like a consequence of the resource’s imminent and critical support level, perhaps coinciding with the rising 20-DMA; below this threshold, significant deterioration is probable. The nearest limit is 38000-37700, Mr. Meena of Swastika Investments feels that 40500-41000 will become a supply provider in the future.

Adani Ports has decided to abandon its intentions to build a cargo utility in Myanmar, sending its stock down almost 7% today.

“In the coming weeks, we expect the market to stay in a condition of upheaval, with selling pressure in the broader market continuing.” We advise investors to use caution in the market, seek for profit booking opportunities, and avoid buying on the downturn,” Yash Gupta said, Angel One Equity Analyst.

Also lacking were global cues. The S&P 500 and the Dow Jones Industrial Average fell from their recent record highs today in Europe and Asia, after a retreat on Wall Street. Investors across the world are nervously awaiting the outcome release of US GDP figures later today, and the conclusion of the Fed meeting next week.


Edited by Anupama Roy

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