Reason for Sensex crashing to 13 month low

The BSE Sensex  and Nifty are trading near 13 months low and have declined 17% from the 2015 High which we saw on 04 March 2015.  In Just 6 months Stock market have wiped out the gains made in past 13 months.Let me put the reason from both Technical and Fundamental Perceptive Sensex corrected by 500 points Nifty almost 200 Points making today as Black Friday.I am discussing few points below which would had led to the correction.

1. Fundamental

  • Concerns over Fed rate hike

Equity Market likes liquidity, Friday Strong US jobs data and Unemployment rate coming sub 6%  fueled expectations that the US Federal Reserve may raise interest rates sooner than previously thought.

Hike Rate means sucking liquidity out of system and this will flight to safe assets in Bonds and stronger currency like USD and money getting sucked out of Emerging market. India Markets have received $11Billion in 2015 till date and up 8% till date so profit booking can be done by FII’s.
  • Expensive valuations of Stock Market

 Valuation for Indian markets at 19.4x on FY15E (16.6x on a rolling one year forward) and 22.5x on CAPE basis which are above long-term averages.

Sensex is trading at more than 20 times FY15 and 17 to 18 times FY16 earnings, ALSO PE (Price to Earning Ratio) as discussed was touching 24 before correction has started and still trading around 21 so valuation are still not reasonable.
  • No Pick up in Earnings growth
It will take at least two quarters for the easy monetary policy benefits to trickle down and pick-up in earnings growth is likely to be the next big trigger for markets. The third quarter results were quite disappointing worst quarter result in almost 5 years.

Dollar gaining strength

The dollar index is gaining strength against basket of currencies including rupee. Yesterday Mario Darghi has also said to increase QE which will further weaken Euro and Dollar will rise is due course.


  • Slowdown caused by China and Yuan Devaluation

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.


Technical Reason

  • Trading below 200 DMA/8000 Level : 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.Break of sacrosanct level of 8000 and closing below it for 2 week is sign of weakness.
  • 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.


  1. Narayanan said:

    Lots of writeups are seen in various quarters on WHY nifty has fallen but hardly any one could indicate that there would be such a great slide beforehand. All the factors being analysed for fall did not happen in one day but were happening over a period of time yet no one could indicate firmly the direction of Nifty. Even now also nobody knows it will go further down or will move up.That’s the reality of Markets where one can do only do a postmortem of the events and no study or technicals can give more than 50 % probability of the movement of Markets. Only time tested method is to pick companies at early growth stage and stay invested for long term which will have a better probability of success. But that needs some real financial analysis on valuations and inside information from companies which is bit difficult for normal public. That is why it’s a fact that in markets 2% make money from 98% of traders who invariably make losses and complicate themselves with so many technical analysis and keep finding reasons as to why market moved opposite to their expectation

    September 5, 2015
  2. ganesh sarma said:

    hi bramesh your analysis is really great.i must thank u for giving levels for intra day trading.
    it is very helpful and i am able to make some profit.similarly ur general articles also boost to
    all traders..whenever we feel down hearted it is like medicine.thanks for all this.keep posting.i wish u great future for the way i am a lawyer aged 70 years keeping occupied in the market for past 6 only i am gaining confidence and doing better.

    September 5, 2015
  3. debraj paul said:

    Gann is gunned down pathetically

    September 5, 2015
  4. Raju Patil said:

    excellent !!!

    September 4, 2015
  5. arpana said:

    Grt… analysis sir..once again proved to be master…

    September 4, 2015
  6. vishnu said:

    Thank you sir

    September 4, 2015
  7. mohitjain said:

    Last hope for bulls 7460

    September 4, 2015
  8. subhash c mittal said:

    Excellent Analysis

    September 4, 2015
  9. Sachin said:

    Gann time cycle is positive till mid September but nothing positive happened till now. Any hope in next few weeks?

    September 4, 2015
  10. Joy said:

    Good post analysis. Interesting read.

    September 4, 2015
  11. prakash tanak said:

    GANN DATE has once gain proved correct

    September 4, 2015
  12. KLP said:

    Excellent write up.

    September 4, 2015

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