The fall was much steeper than expected as the Nifty corrected 190 points and Sensex corrected 661 points on 14 July. The fall was led by banking stocks with the Bank Nifty falling nearly 4%. Both PSU banks and private banks were equally hit on Tuesday with the sell-off sparing neither of them. Vulnerable banks and even NBFCs were badly hit.

The sell-off commenced after rating agencies had expressed serious apprehensions about a likely spurt in gross NPAs in private banks. In addition to this bank specific concern, the markets also had some macro concerns. The Nifty and the Sensex were spooked by the daily COVID numbers, currently above 28,000 and showing no signs of relenting.

At a global macro level, the tiff between the US and China is back in the headlines and that is not giving much confidence to the markets. Even the oil deal is threatening to collapse and that could pull the markets down if oil prices crash. The market panic was visible from the fact that the VIX shot up by nearly 6% in a single day, a sign that fear is rising.