Stock markets around the world plummet; Its a correction, say analysts

Bear run goes on! Sensex down over 500 points Nifty slips below 10,600

Market breadth indicating the overall health of the market was significantly negative. Image source Reuters

On the broader side, Smallcap indices have been bearing the brunt of the mayhem, with the BSE 250 SmallCap Index posting a heavy 2.22% intra-day loss so far.

The Indian stock markets extended its bearish run on Tuesday as the benchmark BSE Sensex tanked over 1,200 points and NSE Nifty plunged below the 10,300 mark in the opening trading session. "Markets had gone up too fast and a correction was more than overdue". The global meltdown in the stock exchange came at a very wrong time for us. "The sell off in the United States has led to a global sell off", said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services. Tata Steel ended with a marginal gain of 0.06 per cent.

Extending its falling streak for the sixth straight session, the 30-share index fell by 1,274.35 points, or 3.66 per cent, to 33,482.81 with all sectoral indices led by realty, consumer durables, metal and banking tradings in the negative zone. The Nifty at one stage touched a low of 10,276.30 and a high of 10,594.15. "However, towards close, market recouped some losses led by value buying on account of earnings growth expectations", said Vinod Nair, Head of Research, Geojit Financial Services. Frankfurt's DAX fell 1.97 per cent, Paris CAC lost 1.75 per cent and London's FTSE shed 1.73 per cent.

During the six-day losing streak, benchmark Sensex index declined almost 7% or 2,529 points, while the Nifty index slumped over 6.3% or 765 points.

As markets extended losses for the sixth successive session, investors became poorer by almost Rs 10 lakh crore, with Rs 2.7 lakh crore of wealth being wiped out in Tuesday's session only amid sell-off in world stocks.

Long-term capital gains (LTCG) tax on equities announced in the Budget may have caused investors to pull money out of the market.

The central bank kept the interest rate unchanged at 6 per cent as widely expected and maintained its "neutral" stance. But he also needs to bring down an inflation rate that breached the 4 per cent midpoint of the target band late last year, and which is expected to climb as the government increases spending before a general election next year.

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