It is the steepest fall for the Sensex, especially from the peak of 21,206 it scaled on January 10 to touch an incredible low of 16,951.50 on Monday. A heart-wrenching day's trade wiped off the Sensex market capitalisation alone by Rs 2,19,717 crore in a single session. The total market cap has eroded Rs 11,85, 285.46 crore since the market downturn started last week, wiping off over 20 per cent of Sensex gains.
“Today's sell-off was unbelievable. This is what digital economics could do. What I thought would take months to happen, happened in a day," said Ramdeo Agrawal, joint managing director, Motilal Oswal Securities. After a volatile day, the Sensex closed 1,408.35 points, or 7.4 per cent, lower at 17,605.35.
“The market is going through a technical correction primarily. I think the correction should end soon,” said Vallabh Bhansali, chairman, Enam Securities. The Sensex valuation dropped from price-earnings ratio of close to 29 on Friday to 22.4 on Monday, making it an interesting proposition for those waiting to enter. “Valuations are at a comfortable level now as we are looking at Rs 1,000-1,100 Sensex earnings for the next year and the Sensex is at 17,000. But markets are never at equilibrium,” said Agrawal.
No one is talking of buying cheap yet as the day was consumed by panic and worries about margin payments and the payout of Tuesday. "We fear a lot of people, especially those who had high leveraged positions, are in trouble. There is no buffer financing options available," said the head of research at a brokerage firm. Foreign funds turned net sellers yet again on Monday, Rs 3,296.73 crore, according to the provisional figures available on the National Stock Exchange website.
“No one can say if this is the low, but I would start hunting for top line companies that have corrected, say, 30-50 per cent,” said Gul Teckchandani, investment analyst. “Try to understand companies, not prices, and then buy,” is his advice.