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Sensex below 23,000: What caused the devastation on Dalal Street?

business Updated: Feb 12, 2016 07:57 IST
HT Correspondent
HT Correspondent
Hindustan Times
Sensex fall

A stock dealer watches share prices on his screen at a brokerage house in Mumbai. (PTI File Photo)

Sinking to its lowest level in 21 months, the Sensex on Thursday crashed 807 points to drop below the 23,000-mark over mounting bad loans and global economy concerns. Rs 3 lakh crore investor wealth (notional) was wiped off in Thursday’s crash. Total BSE market capitalisation fell by Rs 3,18,245 crore to Rs 86,30,930 crore. The Nifty too shed 239 points, or 3.3%, to close at 6,976.35. It was the lowest level since May 2014.

What caused the fall?

The BSE benchmark sensex was down 297 points till around 1 pm on Thursday on the back of the US Federal Reserve pushing back future interest rate hikes but it nosedived after the State Bank of India (SBI) announced a sharp drop in its quarterly profit, losing 475 points in the last two-and-a-half hours of trading.

What to expect

No positive news triggers likely in near future as markets not likely to see quick turnaround. Investors will have to pin their hopes on the upcoming Budget for some upward movement, say analysts.

Global rout

There was mayhem in equity markets around the world with most European markets, including London’s FTSE, France’s CAC40, German Dax and Madrid General Index, in the red.

In Asia too, most markets slid, with Japan’s Nikkei ending down 2.3%, Hong Kong’s Hang Seng closing 3.9% down and Korea’s Kospi falling 3%.

Currency woes

The rupee plummeted by 45 paise to end at an over 29-month low of 68.30 a dollar on fresh demand for the US currency from banks and importers in view of sharp fall in equities amid foreign capital outflows.

Bullion too turns dearer

Global gold prices also rose around 1% to hit an intra-day high of $ 1,213 an ounce, its highest level in 8-1/2 months. On the MCX, spot gold price had risen to Rs 28,934 per 10g.

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