Sensex dips by 900 points: Why did stock market crash today?

The Indian stock market has had a stellar month in December 2023, but the benchmark Sensex had a steep fall on Wednesday, tanking under the 71,000 mark after crossing the historic threshold earlier this month.

Sensex has recorded a major drop of 900 points on Wednesday (ANI Photo)
Sensex has recorded a major drop of 900 points on Wednesday (ANI Photo)

BSE Sensex had crossed the 71,000 points mark shortly after the results of the 2023 state assembly elections were declared on December 3 and 4. Since then, the market had been on a steady rise, staying over 71,000.

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However, Sensex fell around 900 points on Wednesday, December 20, just as the markets closed. BSE Sensex is currently sitting below the 70,500 mark, with all major stocks like TCS and Hindustan Unilever showing a significant decline today.

Not just Sensex, but NSE Nifty also dropped below the 21,200 mark on Wednesday after a record-breaking run in the Indian stock market. Both Nifty and Sensex are recording this major dip just two weeks after hitting their historic high.

Why did Indian stock market fall today

Bank, metal and auto stocks in India remained in the red today, showing gradual decline throughout the market session on Wednesday. Major IT and bank stocks, apart from HDFC, also recorded marginal declines on December 20.

Another reason is the rise in Covid-19 cases across India once again, threatening the markets once again since the lockdown of March 2020. The rise in Covid cases in India is due to the new Covid sub-variant JN.1, first detected in Kerala.

Another reason behind this steep decline in Sensex points is the Foreign institutional investors (FIIs) data. FII majorly offloaded Indian shares during the last market session, selling around 601.52 crore. Meanwhile, Domestic Institutional Investors (DII) only ended up buying 294 crore.

While Sensex is showing a steep decline now, brokerage HDFC Securities had predicted that the early months of 2024 will observe an eight to ten percent spike in Nifty and Sensex, touching a new market high soon.

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