The sharp afternoon fall in the Sensex, almost 150 points within minutes, was due to a sell-off from a global exchange-traded fund (ETF), said market participants. A French bank promoted India-dedicated ETF, which manages around $600 million, was under heavy redemption pressure.
Market players said this ETF sold $150-200 million. The Sensex fell 320 points between 11.57 am and 12.25 pm on Wednesday.
“Market players were bracing themselves for a fall in the afternoon. There were strong rumours that a global ETF is likely to offload Sensex stocks to meet redemption pressures,” said the head of a foreign brokerage house.
Thanks to the morning rumours, many traders had already taken short positions in the market. After the sell-off, the traders entered the market to buy stocks cheaper later in the day.
According to provisional data from the BSE, foreign institutional investors sold shares of Rs 1186.42 crore whereas domestic institutional investors bought shares of Rs 926.16 crore.
