Stock Market Plunges: Nifty-50 Sees Sharp Decline, Panic Selling Explained

• Nifty-50 experienced a significant 353-point (1.38%) drop, closing at 25,232.50 on January 20, primarily after 3 PM.
• Panic selling is defined as investors hastily selling assets due to fear, rumors, or overreaction, leading to rapid price falls driven by sentiment rather than fundamentals.
• The term 'panic selling' has historical roots in 19th-century economic crises like the 'Panic of 1873' and played a role in events like the 1929 Stock Market Crash.
• Today's decline was a broad-based sell-off, triggered by global developments such as US-EU trade tensions, $3 billion FII outflows, weak sectoral results (Nifty IT, Realty), and a depreciating rupee.
• Small retail investors are more prone to panic selling due to emotional reactions and lower risk tolerance, while large institutions can initiate panic through significant selling.

Why It Matters: A sharp Nifty-50 decline on January 20 was driven by global fears and FII outflows, triggering panic selling.