Today Sensex fell by over 1000 points. To be precise, it fell by -1145 points.
I am sure if you follow business new, you will see headlines like ‘Sensex falls over 1000 points!’ OR ‘Sell-Off in Sensex as it falls 1000+ points!’ OR Sensex Crash by thousand points!’ OR something similar.
But despite such link-bait, eye-catching headlines, the fact is that these days, a fall of 1000 points isn’t much. At least not like what it used to be in earlier years.
Because when it comes to markets, you need to look at them in percentage (%) terms. Only then you can gauge the gravity of the fall (or cut or crash or selloff or whatever the business media calls it). Just looking at absolute fall numbers doesn’t help as the Sensex is now much bigger than what it used to be in yesteryears.
In fact, the fall today (22nd February 2021) of 1145 points was just about -2.2%. And that is not exactly a fall that can be called a ‘Crash’ that many newspapers tend to do. You and I need to understand that it’s the business of newspapers and media to sensationalize everything. That’s their bread and butter. So that is what they try to do as frequently as they can by using vivid words like ‘crash, selloff, bear grip, etc.’
If you really want to call something a crash, then the market fall on 23rd March 2020 was one. That day the Sensex actually ‘CRASHED’ by 3934 points or a massive 12.7% in a single day. That is what is a real crash (and not what the media calls each 1000 point drop as). That entire month of March 2020 was a crazy one and saw big crashes multiple times. Do read this post on crazy March 2020 to know how unique and tough that month was. But inspite of everything, markets regained momentum afterwards and the indices ended the year 2020 with about 15% gains (read more about why 2020 was not about simple annual returns).
In fact, by February 2021, index or Indian markets were up by more than 100% or had doubled in just a matter of months!
But coming back, just remember that a 1000 point fall in Sensex isn’t exactly that big a deal nowadays. To give you a perspective, the calendar year 2020 saw Sensex fall by over 1000 points on 14 different occasions. Think about it.
So remember that 1000 point Sensex Fall doesn’t mean what it used to. Or let me put it this way – A 1000 point fall in Sensex isn’t a Big Deal now!