InvestorQ : What was the reason for the 840 point correction in the Sensex on 31 August?
Moii Chavate made post

What was the reason for the 840 point correction in the Sensex on 31 August?

Answer
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Tisha Malhotra answered.
4 weeks ago


Indian stock markets corrected sharply on 31 August in response to the aggression shown by China along the Line of Actual Control. The Peoples Liberation Army or the PLA, which is the official Chinese army, apparently took control of two hilltops on the Indian side.

The worsening situation on the border is one reason for Sensex crashing 1000 points from its peak levels after scaling the 40,000 mark. Two years earlier it was Doklam near Bhutan and this time it is Galwan and Pangong that are flashpoints but markets are in panic mode.

There is also concern over the new margining system that goes live from 01 September because it substantially constrains the hands of the trader in terms of BTST trades and also in the use of margins for contrary trades. That is likely to be spook traders.

The EMI moratorium also was not extended by the RBI and that means it has ended as of August 2020. Now the only way out for stressed accounts is to opt for restructuring else it will lead to spurt in NPAs. That led the banks sharply down on 31 August.