A huge fall in crude oil prices, fear of persisting economic slowdown in China and a downgrade of Saudi Arabia by credit rating agencies spooked global markets and resulted in the largest single-day fall in the Nifty and the Sensex.

Stock market witnessed a bloodbath today with the Sensex crashing by 1,624.51 points or 5.94 per cent to 25,741.56 as steep falls in Chinese equities sparked widespread unrest in global markets.

The 30-share benchmark BSE index posted its biggest daily percentage fall since January 7, 2009. The index fell to as low as 25,624.72 points at one point, its lowest intraday level since August 11, 2014.

Similarly, the 50-share NSE index Nifty plunged 490.95 points or 5.92 per cent to 7,809, also its biggest fall since January 7 2009. It hit as low as 7,769.40 points, its lowest since October 17, 2014.

All broader and sectoral indices had been battered badly and ended deep in the red after traders were in a sell-off mode.

Realty index plunged the most by 10.93 per cent, followed by oil & gas 9.2 per cent, infrastructure 8.67 per cent and power 8.12 per cent.

VEDL was the major Sensex loser and was down 15.3%, followed by Tata Steel -13.11%, GAIL -12.78%, ONGC -11.17% and Bajaj Auto -9.09%.

Motilal Oswal CMD , Motilal OPswal Financial Services, said: "Our markets are down in line with the global trends although our macroeconomic fundamentals are not negative at all. It may take some time to stabilise but I see a very good opportunity to buy for medium to long term."

Dipen Shah, Head of Private Client Group Research, Kotak Securities, said “The global risk off trade has impacted Indian equity markets also. India, however, derives some positives from the current global meltdown. Brent crude, at $44 per barrel, will ease the current account deficit further, which will also have a positive impact on inflation. This will be a serious positive for several Indian companies. The rupee depreciation will also be positive for exporting sectors and companies, especially the ones which have large exports to US. Thus, beyond the current sell-off, markets will likely focus on sectors which benefit on a fundamental basis. On the macro front, passage of crucial reforms bills like GST will make India stand out among emerging markets and we need to wait and watch out for the same.”

Investors' wealth

The overall investors’ wealth, measured in terms of total valuation of all listed stocks, was also down nearly Rs 3.5 lakh crore as it crashed below Rs 100-lakh crore mark and stood at Rs 97,64,237 crore in early afternoon trade.

The losses suffered by the 10 biggest companies in terms of market capitalisation was itself close to Rs 2 lakh crore.

Biggest crash

This is the biggest crash in seven-and-a-half years and the third biggest-ever for the BSE benchmark index.

Interestingly, eight out of the top-10 intra-day falls took place in the year 2008. Today’s fall is biggest since January 21, 2008 when the Sensex crashed by 2,062.2 points.

Jayant Manglik, President, Retail Distribution, Religare Securities, said: "It has been a while since we have seen a fall of this magnitude in our equity markets. This fall has largely been in reaction to the global markets carnage, the second effect of which has been a weaker rupee. Global markets have crashed following weeks of reports regarding China’s low economic growth as its consumption story falters. This is in addition to other irritants such as Europe’s woes and a general slowdown in economies across the globe. The US rebound story too is yet incomplete. In such markets, the Indian economy still remains a bright spot. Of course, low commodity prices are good for India but a global slowdown is not. Anyway, this is no Black Monday, it is a buying opportunity and sharp investors are looking for good openings in specific stocks. Operationally, there are no issues due to stringent margin requirements.Our markets may well be first off the block in recovering from this fall, it is time to look for bargains in high quality stocks."

A report by SMC Investments and Advisors said: "Fitch Ratings lowered the outlook on Saudi Arabia's sovereign ratings to 'negative' from 'stable' citing fiscal deterioration. According to S&P, fiscalshocks are forecast to deteriorate fiscal position of the economy. Lower oil prices and increased spending associated with the accession of a new king are forecast to widen the general government deficit this year."

Markets were in a sell-off mode following fears of a slowdown in the Chinese economy following expectations of tapering demand for goods and services worldwide going forward.

A report by SMC Investments and Advisors said: "Asian stocks fell after Wall Street suffered another bruising blow as deepening concerns over China's economy continued to unnerve global investors. Brent and US crude oil futures hit their fresh 6-1/2-year lows today as investors continue to worry about weak demand as China's economy slows amid a global supply surplus."

Global markets

Alarm bells rang across world markets on Monday as a 9 per cent dive in Chinese shares and a sharp drop in the dollar and major commodities panicked investors.

European stocks opened more than 3 per cent in the red after their Asian counterparts slumped to 3-year lows as a three month-long rout in Chinese equities threatened to get out of hand.

Asian stocks dived to 3-year lows on Monday as a rout in Chinese equities gathered pace, hastening an exodus from riskier assets as fears of a China-led global economic slowdown roiled world markets.

The rupee plunged by 66 paise to fall below the Rs 66 level against the dollar for the first time in almost two years in the opening trade today on sustained capital outflows even as the US currency weakened overseas.

Related Topics