The Sensex, that was on an upward spiral for over nine months and soared to an all-time high of over 30,000 points early in March this year, slumped 2.6 per cent on Wednesday to wipe out their entire gains for the year. While, the sell-off across debt markets globally was the primary trigger for the fall, worries over retrospective tax, GST Bill and economic reforms also weighed in.
The Sensex initially advanced to a high of 27,501.15 but succumbed to selling pressure and dipped below the 27,000-mark with blue-chips — ICICI, ONGC, Cipla and ITC — falling. The index settled 722.77 points or 2.63 per cent lower at 26,717.37. The NSE Nifty crashed by 227.80 points or 2.74 per cent to close at 8,097. Investor wealth fell by Rs 2,89,000 crore to below Rs 100 lakh crore.
Calendar 2015 is not treading on expected lines and brokerage houses and global financial firms are already revising their market earnings and value targets downwards.
Foreign institutional investors, too, have been at the centre of these corrections in 2015. While the net sale by FIIs from Indian equities on Wednesday amounted to Rs 1,699 crore, they have pulled out a net of over Rs 13,000 crore from Indian equities over the last 14 trading sessions (except for the net inflow of over Rs 16,000 crore for a stake in Sun Pharmaceutical on April 21).
Experts, however, see this correction as an opportunity to invest as they feel that the long term fundamentals of the Indian economy remain intact. “Between September 2013 and February 2015, people did not realise a correction in equities and so for those who are under-invested in equities, this correction should be utilised to make an entry. The medium to long term fundamentals and outlook for market remains intact,” said S Naren, CIO, ICICI Prudential AMC.
According to dealers, the sell-off was initially sparked by a slump in Nifty futures listed on the Singapore exchange, which are trading at a discount to NSE index futures. Traders sold NSE index May futures worth Rs 900 crore in the opening minutes, leading to sell-off in algorithmic trades, which account for a third of the total volume on the cash market and almost half of the volume in the derivatives segment.