Sensex Crashes Over 1,400 Points; Nifty Sees Worst Weekly Loss Since 2009

Fri, 28 Feb Closing

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It was mayhem on Dalal Street today. India share markets tumbled for the sixth straight session as global sell-off weighed on the benchmark indices, making worst weekly fall for Nifty since 2009 amid rising concern over the outbreak of Coronavirus.

At the closing bell, the BSE Sensex stood lower by 1,448 points (down 3.6%) and the NSE Nifty stood down by 414 points (down 3.6%).

The BSE Mid Cap index ended the day down 3.1%, while the BSE Small Cap index stood down by 3.5%.

All sectoral indices ended deep in the red with stocks in the IT sector and metal sector leading the losses.

The rupee was trading at 72.10 against the US$.

Asian stock markets finished on a negative note. As of the most recent closing prices, the Hang Seng was down by 2.42% and the Shanghai Composite was down by 3.71%. The Nikkei 225 was down 3.67%.

European markets were also trading sharply lower. The FTSE 100 was down by 3.35%. The DAX was trading down by 3.91%, while the CAC 40 stood down 3.11%.

Note that Indian stock market fell for the sixth consecutive day in a row today tracking weak global cues.

Market participants are worried whether the broader markets will fall further, or will there be a meaningful recovery?

When I asked Apurva Sheth, lead chartist and technical analyst at Equitymaster for his view, he told me that there are bright chances for Nifty to bounce back from here.

Here's what he shared...

Speaking of Indian stock markets, in his latest video, Rahul Shah shares a proven strategy that can give big returns in quick time.

Tune in to find out more about this market beating strategy...

Meanwhile, Tanushree is counting on 7 top stocks from the Indian stock market that will benefit from what she calls the Rebirth of India.

As per her, now is the right time to buy these stocks to profit from the Rebirth of India. You can read about them here.

In news from currency space, the Indian rupee witnessed huge selling pressure today and hit its six-month low level.

Losses were seen amid selling seen in the domestic equity market due to worries over coronavirus fears.

While the rupee recovered later in the day, the gains were restricted by sustained foreign fund outflows and robust selling in domestic equities.

Speaking of currencies, Vijay Bhambwani, editor of Weekly Cash Alerts, tells you the main reasons why not to trade commodities and currencies the same way you would trade equities. Here's an excerpt of what he wrote...

• Currencies are traded in pairs and the most liquid is the USDINR. Currencies are traded in four decimal points just as bonds are. The international derivative trader's association has indicated that forex may be traded in 6 decimals in the coming few years.
  
  It takes months sometimes for the currency pair to pass the next round figure, say from 70 to 71.
  
  Can you really trade commodities and currencies alike or for that matter, equities and currencies alike? Definitely not!

To know more, you can read Vijay's entire article here: Is Trading in Equities, Commodities, and Currencies the Same?

Moving on to news from the commodity space, gold prices continued their rally seen this week and went on to trade on a positive note today. Gains were seen as market participants continued buying safe-haven assets avoiding riskier equities amid rising fears of coronavirus becoming a pandemic.

In the global markets, too, gold prices remained elevated as worries intensified that the rapidly spreading coronavirus could turn into a pandemic and derail global economic growth.

As per the news, the number of new infections inside China - the source of the outbreak - was for the first time overtaken by fresh cases elsewhere on Wednesday, with Italy and Iran emerging as epicentres of the rapidly spreading illness.

Italy has reported more than 400 cases and Iran has reported only 139 cases, but epidemiologists say the true number of cases must be many times higher.

Note that 2019 proved pretty good for gold, as gold surged amid fears of a possible slowdown in global growth and uncertainty surrounding geopolitical crisis in West Asia and Britain's divorce from the European Union.

The same uptrend is also seen in 2020 so far.

Gold prices are seen rising as the rapid spread of coronavirus cases outside of China and its potential negative impact on the global economy are prompting investors to take refuge in safe haven assets like gold.

Increase in the number of new coronavirus cases outside China over the past few days have bolstered the safe haven appeal of gold. South Korea, Italy and Iran have logged sharp increases in infections and deaths, while several countries in the Middle East reported their first cases of coronavirus.

The international spot gold prices have rallied to seven-year highs while India's domestic gold prices rallied to all-time highs.

Speaking of gold, how lucrative has gold been as a long-term investment in India?

The chart below shows the annual returns on gold over the last 15 years...

Gold Has Been a Shining Long-Term Investment

As you can see, barring just two years - 2013 and 2015, gold has delivered positive returns in 13 of the last 15 years.

Here's what Ankit Shah wrote about this in one of the editions of The 5 Minute WrapUp...

• In fact, gold has delivered double-digit gains in 10 of the last 15 years.
  
  During the entire 15-year period, gold has shot up 555% (compounded annual return of 12.1%).
  
  During the same period, the Sensex surged 511% (compounded annual return of 12.0%). If you include dividends, the Sensex returns would be higher than gold by a couple of percentage points.
  
  One must note that the Sensex returns are not representative of the broader market returns. Moreover, gold was a no-brainer. You didn't have to study financial statements, business models and forecast future earnings growth to get a double-digit return on your investment.

Meanwhile, in his latest video, Vijay Bhambwani shares his view on gold and silver prices. He talks about how the bullion prices will move in the short term.

You can check the same here: Will Gold and Silver Prices Fall because of the Coronavirus?

And to know what's moving the Indian stock markets today, check out the most recent share market updates here.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

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