Coronavirus Wipes Away Rs 6.5 Lakh Cr From Indian Stock Market: 5 Reasons Why This Happened
Indian stock market witnessed it’s biggest crash in its history in absolute terms, as Rs 6.5 lakh crore was wiped away from the markets.
BSE Sensex lost 1942 points, while NSE Nifty lost 548 points at the closing of trade on Monday.
Why did this happen? Here are the 5 reasons..
The panic around coronavirus was one of the biggest causes of this sensex mayhem on Monday, worst in the history. As the confirmed cases in India jumped to 42, there are more than 1 lakh confirmed cases globally down.
Although new cases of coronavirus is decreasing in its epicenter: China, the cases are rising in Italy, Iran and other countries.
Investors are fearing that this can trigger a global recession, and sold shares in panic.
Deeping Oil Crisis
After Saudi Arabia decided to cut oil prices and increase production after their talks with OPEC nations failed, there is a global oil crisis, with price of crude oil falling by 30%.
This is the worst oil crisis since the Gulf War, as a direct confrontation between Russia and Saudi Arabia looks eminent.
Although the oil prices have substantially reduced, India doesn’t seem to get benefitted.
This is the reason Reliance share prices witnessed its worst fall in 10 years, and Mukesh Ambani lost $5.8 billion in a single day.
Banks and Financial Crisis
Yes Bank’s suspension from banking operations led to its share prices drop by 85% on Thursday. Although its stock prices have improved, since RBI has assured to pump in more capital to let the bank survive, there is a financial crisis in the market, and the investors reacted negatively to it.
Domestic rating agency Icra has already downgraded the bonds of Yes Bank worth Rs 52,000 crore, and it’s adding to the panic.
Foreign Investors Are Selling Like Crazy
In the last 15 trading sessions or so, FII or Foreign Institutional Investors have been selling non-stop, pulling away Rs 21,000 crore from the market.
Global slowdown, and uncertainty can be the reason, but its negatively impacting the Indian stock market.
Global Markets Are Down
And lastly, every major stock exchange across the globe has tumbled, sending shockwaves across the world, and India is not immune to it.
While Japan’s Nikkei lost 5.2% points, Australia’s commodity-heavy market was down by 6.4%. At the same time, MSCI’s broadest index of Asia-Pacific shares outside Japan tanked by 3.9%, which is its worst day performance since late 2015.
Shanghai blue chips shed 2.8% points. US bonds market, and European stock exchanges also suffered heavy losses.
We will keep you updated, as more details come in.