The Indian equity market saw many ups and downs in the past decade with some brutal corrections followed by rocketing gains. It was a cat and mouse game as the tug of war continued between the bulls and the bears.
Interestingly, the Indian market saw the biggest falls in the past 10 years. The last two corrections came this year itself on February 2 and February 11.
Moneycontrol now takes a look at the biggest connections in the Indian markets in the llast 10 years and the reasons behind them:
January 21, 2008:
The benchmark index Sensex on January 21, 2008 saw its biggest ever fall of 1408 points. The Sensex recovered to close at 17,605.40 after it plunged to day’s low of 16,963.96, on high volatility as investors panicked following weak global cues and fears of recession in the US.
- We witnessed a change in the global investment climate as the US economy was going into a recession with foreign institutional investors trying to reallocate their fundsto stable developed markets.
- Hedge funds and FIIs were the biggest sellers in the Indian markets, making the most of the unprecedented bull run.
- There is a big correlation among global markets. The presence of hedge funds across asset classes, along with increased global movement of capital, has increased event-related volatility.
Januray 22, 2008:
The Sensex saw its biggest intra-day fall the next day when it hit a low of 15,332, down 2,273 points. However, it recovered losses and closed at a loss of 875 points at 16,730. The Nifty closed at 4,899 at a loss of 310 points. Trading was suspended for one hour at the BSE after the benchmark Sensex crashed to a low of 15,576.30 within minutes of opening, crossing the circuit limit of 10 percent.
February 11, 2008:
The Sensex plunged 4.57 percent intrady as the Index shed 796.43 points. The benchmark Index fell 833 points, or 4.78 percent and closed at 16,630 on growing global worries over slowing economic expansion.
Weak global markets and disappointing corporate earnings affected the market sentiments.
March 3, 2008:
The Bombay Stock Exchange benchmark Sensex witnessed its second-largest fall ever losing 900.84 points to close at 16,677.88 on frantic selling by funds, triggered by deepening concern over United States recession and some Budget-related concerns.
The markets fell 3.19 percent intraday thereby shedding 549.68 points. This was furher aided by the massive loan write-off by state-run banks, announced in the Budget which inturn increased the bear hold.
March 17, 2008:
The month of March once again saw the Sensex tanking 3.38 percent or 517.44 points intraday. But the worst was yet to come on that day as the Index plunged and closed lowr by 6 percent, thereby shedding 951 points and closing below the 15,000 mark.
Gold prices zoomed past all previous records and opened at a new high of around Rs 13,500 in the bullion market on the back of brisk buying.
The valuation at which Bear Stearns changed hands shocked investors as JPMorgan Chase and Co. took over the firm for USD 240 million.
The US Federal Reserve had cut its discount rate by a quarter to 3.25 percent from 3.5 percent and created a lending facility for investment banks at the New York Federal Reserve Bank, first time after the Great Depression.
October 24, 2008:
The Sensex plunged 9.09 percent intraday on October 24, 2008 taking 869.64 points. However, the Index was down by 1070.63 points or 10.96 percent to close at 8,701.07 while the Nifty ended at 2,557.25, down 13.11 percent or 386 points.
The BSE Midcap closed 8.38 per cent lower and BSE Smallcap Index ended 7.66 per cent down. The main reason for the fall was that the Central Bank in its policy review did not reduce its rate. The fall was further aided by the confirmation of recession in the UK.
The main reasons for the fall was RBI”s credit policy announcement, FII outflow and the government’s stance on FII to reverse short positions.
July 6, 2009:
The Sensex tumbled 6.98 percent intraday by around 1054.47 points, as investors went on a selling spree following the Government not coming out with any significantly positive news on the reforms and divestment fronts when it presented the Union Budget. The Index however closed down 869.65 points, or 5.8 percent to 14,043.40.
August 24, 2015:
The Sensex tanked 3.7 percent intraday on August 24, 2015 and ended over 1,600 points down, the biggest in over seven years led by global markets crashing. The rupee fell to 2-year low and plunged by 66 paise to trade below Rs 66 level against the dollar for the first time in almost two years in opening trade on sustained capital outflows even as the US currency weakened overseas.
The Chinese stock markets plunged nearly 9 percent and wiped out what was left of the 2015 gains, which in June has been more than 50 percent. Brent and US crude oil futures hit their fresh 6-1/2-year lows as investors continue to worry about weak demand as China’s economy slows, amid a global supply surplus.
The rupee fell to a two-year low and plunged by 66 paise to trade below Rs 66 level against the dollar for the first time in almost two years in opening trade on sustained capital outflows even as the US currency weakened overseas.
Overseas investors have pulled out nearly Rs 2,000 crore from the Indian stock markets since the beginning of August, amid concerns over Chinese economy coupled with sharp erosion in the value of rupee.
February 2, 2018:
Benchmark indices witnessed the steepest single-day fall in more than a year on Friday as stricter tax rules for stock investments and the easing of fiscal deficit targets unnerved investors.
The selloff in developed bond markets — mainly in the US — accentuated the nervous undertone in equities as investors kept a wary eye on firm oil prices, considered one of the biggest risks to the Indian economy. The Sensex plunged about 840 points, or 2.3 percent to close at 35,06.
- Long-term capital gains tax
The move surprised D-Street as most analysts were factoring in a change in definition of ‘Long Term’ to 2 or 3 years from 1 year. An imposition of additional tax over and above this time-frame issue spooked investors. The government introduced the much talked about long term capital gains tax (LTCG) on sale of listed securities on gains of over Rs1 lakh.
- Fiscal slippage
The market is also worried about the fiscal slippage issue, largely because of the degree of deviation as well. The government revised the fiscal deficit target to 3.5 percent of GDP to for 2017-18, indicating a deviation from the path of fiscal consolidation because of a spillover impact of the new indirect tax system—Goods and Services Tax.
- Tax on income from equity mutual funds
In times when flows from mutual funds were one of the highest, the imposition of a fresh tax on income from them could have spooked investors too. Investors will have to pay 10 percent tax on distributed income from equity oriented mutual funds, as per the Budget proposals announced.
The Sensex saw its highest ever loss of 1,408 points at the end of the session on Monday. The Sensex recovered to close at 17,605.40 after it tumbled to the day’s low of 16,963.96, on high volatility as investors panicked following weak global cues amid fears of the US recession.
Source by:- moneycontrolShare: