Nifty Crashes 1000 Points in 2016 :Reason for sharp fall

The BSE Sensex plunged over 700  points and Nifty declined over 220 points and Nifty closing below 7000 lowest sinse May 2013. Nifty has now corrected 1000 points in last 66 trading sessions. Let me put the reason from both Technical and Fundamental Perceptive, Below is the complied list of fall in sensex from ET.


1. Fundamental

  • Rise in NPA of Banks:

Most of the PSU banks have reported over 40 per cent jump in provisions requirement. As much as 85 per cent of the banking system’s weak assets are in the books of public sector banks (PSBs). Increasing stress is also visible in the quantum of strategic debt restructuring and 5/25 structuring being carried out by banks.

  • Global cues

Global stock markets are tumbling since the US Fed has raised interest rate first time in 7 Years. Rise in interest rate has taken the flight of capital from Emerging markets.

  • Yuan Devaluation

Safe-haven government bonds and the yen rallied on the widespread unrest in the financial markets,  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.

  • Rupee at lowest since September 2013

Rupee slumped to as low as 68.19 per dollar . It is lowest since September 2013, as Asian markets reeled under fears of a China-led global economic slowdown.

  • Earning again Disappointed

Bull markets normally come with earnings growth,December quarter results for India Inc have failed to impress as earning were again disappointing, capex plan at hold for most of companies.

  • Fall in crude oil prices:
Crude oil prices have been in a downward spiral since July of 2014. The benchmark Brent crude prices in London have crashed from $106 in July, 2014 to $30 today, a drop of over 70 per cent.Fall in crude is beneficial to India but it also shows Global economy is slowing and also many FII who have invested in commodities and crude are facing redemption pressure so exiting equities to fulfill obligations.

2. Technical Reason

  • Trading last Swing Low of 7200 led to panic decline in market as many traders will keep that as SL and today market also breached the low of 7120 which  is a Gann number which lead to panic decline.
  • 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.
  • Break and close below the psychological level of 7000 will lead to additional panic which can bring nifty down to 6700-6800.
  • 8 Year Cycle Effect:1992,2000 and 2008 market crashed this time its 2016

16 thoughts on “Nifty Crashes 1000 Points in 2016 :Reason for sharp fall”

  1. Overvaluation another reason, even after the fall mkt is more expensive than our neighbors with a 18 p/e, can correct towards a 15 p/e, with earnings unlikely to increase any time soon.

  2. Hello,
    While the explanation for the 1000 points slide in nifty is commendable, aren’t some of these factors known n factored in. Like the China slowdown and US fed rate hike. We have known about this for months. But what we perhaps don’t know or can’t anticipate is how China will try to quell the slowdown. Will it resort to further devaluation given the way dollar and yuan have moved over the last week when Chinese markets were shut. Also dollar was expected to strengthen post rate hike. But it has been falling.
    Earnings in india were expected to be weak. ..was there really a surprise? Yes the banks’ clean up, extent of npas and losses were not anticipated. But after Rajan’s speech today maybe there will be some calm. As for technicals it is a science of history repeating itself. Can we fight off the 8 year cycle? What happens when your targets on the downside are surpassed? Will the counts change? Or will it just be further retracement n extension from previous swing levels.

  3. 1. If your coming in doing well why will ur stock fall.

    2. 40% of India market money comes from FII

    3 and 4. China sneezes world freezes

  4. Bank Nifty is 25% weightage in Nifty Most important when sentiment is weak nothing works out people will sell everything at peanuts

  5. Sir can I invest some of money from here or not,if yes then what is your best recommendation from here,plz suggest me sir.

  6. Bramesh..thanks for sharing..could you also explain/relate each point with its impact to Indian market? I believe most of us like me have this confusion – may be reading much about it/your explanation with details.. might help us understand.

    1. Rise in NPA – shouldnt affect only bank index? What impact does it make to the bank?

    2. Us fed rate hike – shouldn’t only affect us markets? How does it affect Indian markets?

    3. Yuan devaluation – how it is related to Indian market & what impact does it make?

    4. China slowdown – how does it have an impact on India?

    5. Rupee weakening – how does it affect nifty? How does it impact each Indian companies?

    6. Weak earnings? – makes sense

    7. Crude oil price fall – shouldn’t aid companies relying on crude because of cheaper source?

    8. Technical – isn’t it a pattern created according to nifty movement? How does such pattern triggers/lead to fall?

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