Capitulation

In financial markets, the point at which investors — overwhelmed by sustained losses — abandon their positions en masse, triggering a final sharp sell-off that frequently marks the exhaustion of a bear market and a subsequent price recovery. Technical analysts identify capitulation through unusually high trading volumes accompanied by steep single-day percentage declines. In policy economics, the term describes a government abandoning a fiscal or exchange-rate defence — for example, India's forced devaluation in 1991 under IMF conditionality represented, to critics, a capitulation of dirigiste economic orthodoxy.