Sensex cracks 1000 points, Reason for the fall

The BSE Sensex plunged over 1000 points and CNX Nifty declined over 300 points in 2 session after RBI policy.Let me put the reason from both Technical and Fundamental Perceptive


1. Fundamental

  • RBI pause on further rate cuts:
On expected lines, the Reserve Bank of India slashed repo rate by 25 bps, but a cautious stance for the rest of the year weighed on sentiment.The RBI has cautioned on inflation increasing due to the sub-normal monsoon, which can push the inflation rate to 6 per cent by January 2016, which is also the target set earlier for monetary policy.

This indicated that the RBI will take further action based on inflationary developments. The CPI inflation will remain benign for the next few months before showing an increasing trend.

  • Monsoon forecast stokes fears of drought
India’s Meteorological Department said monsoon this year is likely to be below the long-period average. If the Met’s forecast comes true, this could be the second consecutive year of below-normal monsoon.

The government has downgraded this year’s monsoon forecast to 88 per cent of the long-period average, Earth Sciences Minister Harsh Vardhan said, raising fears of a drought in the country where nearly half of farmland lack irrigation facilities.

The government had in April forecast monsoon rains at 93 per cent of the long-period average. The forecast has an error margin of 4 percentage points.
  • Greece Negotiation:
On the global front, Greece negotiations kept global markets on the edge.
Athens is due to make a 300 million euro debt repayment to the International Monetary Fund on Friday. Greek Labour Minister Panos Skourletis told Skai TV his government could make no more concessions.
  • US Federal Reserve Rate hike:
US Federal Reserve chairperson Janet Yellen’s remark that interest rates are likely to rise this year has made global equity markets jittery.
Emerging Market India/China will see outflows from FII’s if Rate Hike happens.

2. Technical Reason


  • Trading below 200 DMA: Nifty/ Sensex after 15 months 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   and Daily Analysis Gann/Appoint and Gunner plays an important role in finding impulsive move, all studies were pointing towards a big move.


  • Forming Base before the next big move, Market are currently trading in 4 wave which leads to time and price correction, if one observe the daily chart we are trading in a big range of 8000-8500 from past 2 months with a voaltile bias, these kind of price action leads to base building from next move.

11 thoughts on “Sensex cracks 1000 points, Reason for the fall”

  1. Is it possible to predict a time frame for any base building process through any type of studies, laying emphasis on time component of market movement? The technical studies are generally little skewed on price component.

  2. Bramesh sir very good article after base formation we will see a new high different frm 9200 or not possible for this year

  3. NIFTY is in a multi year bull market any correction & trading below & around 200 DMA (not convincingly since after consecutive lower lows ? ) happening which is the game of traders but analysing the final break out of 200 DMA happens with a bear market rally so ur kind technical view brakesh on this?

  4. if 7997 gone than mostly near 7850/7700 range we can see it. Will see price action near that level to get further confirmation

  5. Great analysis sir .
    Where would this Wave 4 end ? Any retracement levels.
    And are we in Wave 4 , subwave C ?
    Thank you!

Leave a Reply