The penalty is for a deliberate knock on not a knock down. The downwards motion of the hand is an indicator that no attempt to catch the ball was made. A knock up can be penalised too if it is deliberate and no attempt to catch the ball is made.
Hand position has nought to do with it, intention is the test
Intentional knock or throw forward. A player must not intentionally knock the ball forward with hand or arm, nor throw forward.Sanction: Penalty kick. A penalty try must be awarded if the offence prevents a try that would probably otherwise have been scored.