All will be well, says Raghuram Rajan on market crash

Mumbai, Feb 11(AZINS) In its biggest fall in 6 months, market benchmark plunged by 807.07 points on Thursday to settle below 23,000-level after 21 months as fears of a global slowdown and disappointing quarterly numbers combined to batter investor sentiment.

Commenting on the crash, Raghuram Rajan, Governor, Reserve Bank of India said that the market turmoil will pass.

"The clean-up will get done and Indian banks will be restored to health," he added.

The carnage in the stock market made Dalal Street investors poorer by over Rs 3 lakh crore.

Total investor wealth, measured in terms of cumulative market value of all listed stocks, tanked by more than Rs 3 lakh crore. Following Thursday's fall, the Sensex has come off over 23 per cent from its all-time peak of 30,024 recorded nearly a year ago on March 4 while the total investors' wealth has come down by close to Rs 20 lakh crore since then. With this domestic equities have entered a 'bear market', which experts define as a fall of 20% from all-time peak.

The BSE Sensex after opening lower at 23,758.46 continued to slide on heavy selling pressure in blue-chips, forcing the index to touch a low of 22,909.12 before settling at 22,951.83 showing a fall of 807.07 points or 3.40%. This was index's weakest closing since May 12, 2014. The 50-share NSE Nifty broke 7,000-mark after plunging 239.35 points or 3.32% to 6,976.35.

The fall was so widespread that 28 Sensex stocks closed with losses including Adani Ports, BHEL, Tata Motors, ONGC, M&M, Tata Steel, HDFC, RIL, Axis Bank, GAIL, Maruti, ICICI Bank, HDFC Bank, lupin and ITC falling up to 6.94%.

Overseas, Asian and European shares declined, as investors weighed a warning from Federal Reserve chair Janet Yellen that global financial market turbulence could hurt US growth. Hong Kong listed shares plunged 3.85% to a three year low, while European markets were also down in their early trend.