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Black Monday Bloodbath Nosedives Sensex by 1150 Points, Was it Yuan Effect?


Top ten Sensex infra-day falls

Top ten Sensex intra-day falls in history


The Indian markets dovetailed terribly on Monday taking down the Sensex by 1100 points and eroding Rs.4 Lakh Crore from the market instantly.

The ripple effect is seen in virtual shock and apathy in the trading session in the morning with brokers heart-broken to make any move, while the Indian rupee hit Rs.66.50 per US dollar, which is the lowest since September 2013.

Monday’s market crash is the biggest after 2008 recession, when on October 24, 2008, the crash went down to 1204.88 points. With the market tumbling down unprecedented on Monday, speculations are going wild on the cascading effect on other indicators and the possible global metdown while pro-market watchers are at pains to depict it as momentary.

While the Indian market reacted cautiously last week when China announced one of its worst devaluation of Yuan, the possible market reaction in India on the opening day of the week is abrupt and unexplainable. The slowdown of the Chinese economy may recover from its devaluation but it is strange to see the Indian market reacting similarly as devaluation of the Indian rupee on par with its Chines counterpart is unadvisable for the long term market stablization.

However, the market needed to correct itself from the buoyant artificial picture being projected by the industry and the market in India following the BJP win last year. Though the Modi government is known for its pro-business and pro-industry policies, the undue delay in passage of bills and the bedlam in parliament have enough reasons not to cheer about for the industry in general.

Next in the queue was the Chinese unilateral action devaluing its Yuan that has crippled the expectations about possible Indian recovery since 2008. In fact, Indian recovery map was not as great as China or the US since 2008 crash as its macro economic indicators like current account deficit and forex reserves remained same, said Nirmal Jain, Chairman and Managing Director IIFL in a TV show on CNBC-TV18.

Another reason for the abrupt fall is that FIIs or foreign investors are quick to withdraw their investments in India after the Chinese market went down over the Yuan devaluation. Unless Indian investors repose their faith in the markets, Sensex is unlikely to stabilize in the next few days, as experts have advised buying for their clients now.

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