The BSE Sensex plunged over 1800 points and Nifty declined over 501 points one of the largest decline in past 5 years .Let me put the reason from both Technical and Fundamental Perceptive
- Yuan Devaluation
Asian stocks dived to 3-year lows on Monday as a rout in Chinese equities gathered pace, hastening an exodus from riskier assets as fears of a China-led global economic slowdown roiled world markets.
Safe-haven government bonds and the yen rallied on the widespread unrest in the financial markets, set in motion nearly two weeks ago when China sharply devalued the yuan and stoked concerns about the state of its economy.
- Slowdown caused by China
Global stock markets are tumbling after a survey showed Chinese factory activity contracted at their fastest pace since the depth of the global financial crisis in 2009. Fears of a China-led global economic slowdown drove Wall Street, previously seen as a safe-haven, to its steepest one-day drop in nearly four years on Friday.
- Rupee at lowest since September 2013
Rupee slumped to as low as 66.48 per dollar on Monday morning. It is lowest since September 2013, as Asian markets reeled under fears of a China-led global economic slowdown.
- Moody’s lowers India’s growth forecast to 7%
Fears over deficient rains in the current monsoon season and gradual progress of reforms have prompted global credit ratings agency Moody’s to lower India’s growth forecast for this year by 50 basis points to 7 percent.
On the macro front, India’s exports narrowed for the eighth straight month by 10.3 per cent in July to USD 23.13 billion, widening the trade deficit to USD 12.81 billion.
2. Technical Reason
- Trading below 200 DMA: Nifty/ Sensex are trading well below its 200 DMA, putting pressure on market, as many FII’s have 200 DMA benchmark for buying or selling.
- Gann Date Effect- As discussed in Weekly Analysis Gann/Appoint and Gunner plays an important role in finding impulsive move, all studies were pointing towards a big move.
- NF opening volume in first 15 mins was 25 Lakh highest seen in past 2 years suggesting serious long liquidation by smart money.