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The BSE Sensex crashed 526.41 points, or 2.74%, on Thursday, its biggest single-day fall since September 2011, as the US Federal Reserve's plan to end its stimulus package spooked markets worldwide and led to the rupee crashing to an all-time low. The Sensex closed at 18,719.29 points.
But experts feel that this crash offers long-term investors a window to buy shares of companies with strong fundamentals.
Investors lost Rs 1.57 lakh crore as 28 of the 30 Sensex scrips lost ground. Wipro, up 1.3% to R347.45 and Sun Pharma, up 0.7% to R967.80 were the only gainers.
The biggest losers were Jindal Steel, down 9.6% to R222.15, Tata Steel, down 6.25% to R272.40, Hindalco, down 6.24% to R97.70 and Bhel, down 5% to R171.30.
The Nifty fell 166.35 points or 2.86% to close at 5,655.90. All the 13 indices on the BSE ended with large losses.
"Fears of an earlier-than-expected withdrawal of the monetary stimulus by the Fed led to a sharp fall in markets across the works and India was no exception," said Dipen Shah, head of private client group research, Kotak Securities.
"The huge built up of leveraged positions is what led to the cascading fall across asset classes," said Amar Ambani, head of research, India Infoline.
Companies that have large foreign exchange borrowings or those that have a high import bill will be adversely impacted, said Vinay Khattar, head of research, retail capital market, Edelweiss Financial Services.
Vaibhav Agrawal, vice-president, research, Angel Broking, added: "Those (companies) that have borrowed in foreign exchange to fund domestic obligations will be in trouble."
This is, however, a good time to build a portfolio, he said. Retail investors can buy on dips. "Inflation coming down is a huge positive for the markets going forward," he added.
A caveat: there will be short-term volatility. So, consult your financial advisor before investing in any stock.