Benchmark indices went into a tailspin as the Sensex plunged 1,700 points and the Nifty closed the day lower by a whopping 510 points. The Sensex is at a 3-month low and is saw the biggest fall in seven months.
Here's what some experts have to say about the market crash.
Dr. Joseph Thomas, Head of Research, Emkay Wealth Management: "The frontline indexes nosedived on a day of unprecedented selling across sectors and market caps. The movements in the domestic market has been in sympathy with the movements in other Asian markets as well, and quickly followed by Europe at opening. The tapering of bond purchases by the Fed and the rising inflation fuelled the speculations of an early hike in rates by the Fed, that is , even before the conclusion of the tapering of bond purchases. These developments lent some strength to the US Dollar, and also prompted exit from emerging markets by FPIs. The markets are expected to remain volatile with reports of surging infections in the next wave of the pandemic especially in some of the European countries."
Says Hemang Jani, Head of Equity Strategy & Senior Group VP, Broking & Distribution, Motilal Oswal Financial Services,"Equity markets have plunged almost 2% amid the emergence of a new, highly mutated Covid-19 variant. EU announced temporary ban of flights from South Africa and few EU countries are already under full lockdown scenario. Thus there is fear of this new variant spreading to other countries which might again derail the global economy. Already there is uncertainty as to when the US Fed will start raising interest rates. So markets might continue to reel under pressure and would actively track covid situation globally."
According to Manoj Dalmia, Founder and Director, Proficient Equities Private Limited, a new variant of COVID has been found which threatens to create a negative sentiment with some countries tightening curbs. This variant is of concern that it might resist vaccines and immune responses," he says. Other Reasons for fall according to him are FII being net sellers amounting to Rs 2300 crores, stretched valuation of markets, brokerage downgrades and concern over the liquidity tapering by the US federal reserve as well as the benchmark yields falling by 6 basis points.