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Sensex tumbled nearly 700 points to 43,828
Sensex tumbled nearly 700 points to 43,828

Investors lose 2.2 lakh crore in a day as Sensex slumps nearly 700 points

  • Analysts attributed the sharp selloff in Indian markets to profit-taking after the recent run-up
  • The India VIX index, commonly known as fear gauge, jumped 10% to 23.15 today

Indian shares slipped from record highs today as investors booked profits. Nifty 50 index, which had hit a record high of 13,145 in early trade, fell 1.5% to settle at 12,858. The Sensex tumbled nearly 700 points to 43,828, wiping out over 2.2 lakh crore of investors' wealth.

Ashis Biswas, head of technical research, CapitalVia Global Research, attributed the sharp selloff in Indian markets to profit-taking after the recent run-up. "We have observed volatility to expand in today’s trading session indicating profit booking and distribution of stocks at a higher market level," he said.

The India VIX index, commonly known as fear gauge, jumped 10% to 23.15 today.

Eleven of the 12 sectoral indexes ended lower, with the pharmaceutical and real estate indexes falling more than 2% each. IT stocks fell 1.62%.

Only state-run banks ended higher. The Nifty PSU banking index that tracks them advanced 1.8%. Punjab National Bank rose 3.1%, while Bank of Baroda jumped 4.7%.

Private-sector banks HDFC and Kotak Mahindra were the top drags on the Nifty 50, followed by IT services firm Infosys.

Meanwhile, world shares hit a record high following an advance on Wall Street that saw the Dow Jones benchmark crack 30,000 on U.S. president-elect Joe Biden's transition to the White House and increasing optimism that a COVID-19 vaccine would be ready soon.

Record net foreign buying so far this month has driven India’s stocks to new highs. Foreign portfolio investors have so far this month pumped in over 55,000 crore into Indian equity markets, driving Sensex up 10% so far this month.

Here is what analysts said on today's market performance:

Ajit Mishra, VP - Research, Religare Broking Ltd

"It’s normal to see an intermediate dip in a trend and we may see further profit-taking ahead. Besides, volatility is also likely to remain high due to scheduled derivatives expiry. Nifty has the next crucial support at 12,700. Considering the scenario, we suggest limiting naked leveraged trades and preferring hedged positions."

Vinod Nair, Head of Research at Geojit Financial Services

"The market rally which was led by developments on vaccine and FPI inflows came to a halt today due to profit-booking across sectors in the second half of the trading session. While western markets continued its positivity, being encouraged by news on vaccine developments and ease in the US political risk."

"We can expect profit booking to continue in our domestic market, in the short-term, as the liquidity driven rally can take a pause having reached all-time high on a monthly basis. This money was triggered by the overwhelming result of the US election unleashing high amounts of funds which was put on-hold. FIIs can take a breather and check for the next phase of policies in the US and Europe for 2021."


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