The BSE Sensex plunged below 34000 marks after dropping about 1275 points or about 3.6 percent in opening trade today. This is secondary to cross-border losses due to a large sell-off in the world market. Around Rs. 4.95 lakh crores of investors are wiped off because of the selloff in the broader market. BSE Sensex fell about 1275 points or 3.6 percent in opening trade. The rupee dropped to its six-week low at 64.36 against US dollar after falling 29 paise. On Monday, Indian currency closed at 64.07 against US dollar because of steep losses in local equities.
The current scenario took shape since Friday when US non-farm payroll roses by 200,000 jobs in January against an anticipated 180,000 jobs. There was a fear of increasing inflation and borrowing costs that caused investors to rethink to view on stocks.
Some other reasons which might have influenced the market.
- The tension between the USA and North Korea which have created a sense of panic globally.
- False news of Chinese possibility of an invasion of India triggers negative effects.
- Highly prices and highly inflated values of our markets prices at this point everybody wants to encash gain.
- The announcement in budget speech about imposing 10 percent tax on long-term capital gain over rupees 1 lakh.
- Based on the historical data about Dow to Nifty ratio, says that when it reaches 2.0 or above, markets usually see a crash of about 5–10 %..
All these are possible factors which may have lead to a sudden plunge in the stock market.