On Wednesday, the Indian stock market trembled because of prevailing uncertainties in global market and the Indian investors started dumping their stocks that resulted in 3rd biggest Sensex downfall. The landslide selling, actually triggered by the despair in the US housing loan segment, resulted in the Sensex plunge by 615 points or 3.96 per cent.

This was the third biggest single-day point fall in the Sensex ever in history. The 290-point rally on Tuesday made investors poorer by Rs 1,81,000 crore and the market capitalization went down to Rs 43.50 lakh crore.

Because of intense selling pressure, the Sensex kept on falling to close below the 15,000 level at 14,935.77 on Wednesday. According to the report, Japan’s Nikkei went down 2.2 per cent, Hong Kong’s Hang Seng slipped 3.2 per cent, China’s Shanghai Composite stumbled 3.8 per cent, and markets in South Korea and Taiwan went down 4 per cent.

Religare Enterprises Ltd national head (retail equity) Ashu Madan said that this is a correction driven by global financial markets. The immediate future depends on the outcome of the global markets, which is beyond anybody’s control. In this downfall, shares from the real-estate pack suffered the most in both BSE and NSE.

Dawnay Day AV Securities Pvt Ltd director Seshadri Bharathan said that the stock markets collapsed because of subprime market meltdown. When a US mortgage lender said that it had no cash to pay its creditors, it triggered the trouble in US market that resulted in global market crash.

When we talk about Indian stock market, on May 18, 2006, the Sensex had seen the biggest single day fall of 826 points because of concerns of a possible change in taxation laws on sale of shares. The second biggest fall of 617 points had occurred on April 2, 2007 when the RBI surprisingly hiked the interest rates.

The Indian stock markets have been closely linked with other global markets and one of the major reasons for that is that the players are the same everywhere. FIIs from the US, London and Far East are quite active here. This is why, any development in the US market leads to churning of funds everywhere including India.

On July 27, the similar story had happened when the Sensex plunged by 542 points as stocks tumbled in Asia and the US. This had happened because the US credit and housing markets fallen down to other areas of the financial sphere that prompted investors to reduce risk by selling stocks.

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