Sensex plunges 800 points, smallcaps bleed most. Top factors behind Rs 6 lakh crore crash
Nifty gave up its hold over the 22,000 level while Sensex fell around 800 points or 1% to the day's low at 72,300 on Wednesday. The sell-off was deeper in the broader market where midcaps, smallcaps and microcap indices fell around 2% each. In the process, Dalal Street investors were left poorer by about Rs 6 lakh crore as the market capitalisation of all BSE-listed stocks fell to Rs 386 lakh crore.
Nifty has been consolidating in a sideways move but consistent closure above 22,000 for eight consecutive sessions had suggested a prevailing positive trend. Technical analysts believe that if the breakout below 22,000 sustains, it could trigger a directional move on the downside.
«Market is likely to be in a range-bound zone in the near term. FIIs have sharply reduced their selling this month and have turned buyers to the tune of Rs 872 crore in the cash market, so far in February, despite the high US bond yields. This indicates that FIIs are unlikely to press big selling pulling the market sharply down,» said Dr. V K Vijayakumar of Geojit Financial Services.
Here are key factors behind the fall in Sensex, Nifty and smallcaps:
1) Sebi plunges into action
The gravity-defying rally in smallcaps and midcaps has caught the attention of markets regulator Sebi which has asked mutual funds to disclose more about risks in the space where liquidity could be a challenge.
Mutual funds are being asked to disclose how long it might take to accommodate large redemptions, what impact large outflows could have on the value of the
