• MARCH 6, 2020

Today's Stock Market Crash: 10 Points

Indian stock markets collapsed in early trade today...and while there was some recovery towards the end, we still ended deep in the red.

Here are 10 points to note...

  1. The Sensex nosedived as much as 1,460 points in the first few minutes of trade. The Nifty dropped to a low of 10,827, down 442 points intra-day. The markets however trimmed some of the losses during the course of the day.

    There was a selloff across sectors along with panic selling in the smaller indices too. The BSE Midcap and BSE Smallcap indices ended down 3.4% and 2.9% respectively.

  2. The Reserve Bank of India's (RBI) decision to put Yes Bank under moratorium led to the biggest ever fall in share price of the private lender. Shares of Yes Bank fell as much as 85% to Rs 5.6 before recovering towards the end of the day to end at Rs 16.2, down 56%.

    The banking regulator has also put a cap on withdrawal at Rs 50,000 for Yes Bank customers.

    The RBI took over from the board of the Yes Bank for 30 days, saying it would work on a revival plan.

  3. RBI's move had a ripple effect on other banking stocks, with some falling very sharply to begin with.

    Shares of RBL Bank fell as much as 15%, while IndusInd Bank and State Bank of India (SBI) dropped 7-8%.

  4. The coronavirus cases outside of China have been increasing rapidly, making inroads into US, Europe and Middle East, which made investors more worried about global growth going ahead. And more recently, India too.

    Today, the number of cases breached the 100,000 mark.

    South Korea, Italy and Iran reported highest infected cases outside of China, while cases are increasing in United States and other parts of Europe as well.

    Note that market participants are seen taking a flight to safety as stock markets see a sharp fall post the coronavirus impact.

  5. Overnight the US indices had recorded sharp losses. This was yet another negative cue awaiting Indian markets on open today.

    The Dow Jones Industrial Average fell 3.6%, while the S&P 500 lost 3.4%. The Nasdaq Composite dropped 3.1%.

    During the day, as the Asian markets opened, there was further negative news... Japan's Nikkei fell more than 3%, while Hong Kong's Hang Seng, Australia's ASX 200 and South Korea's Kospi dropped over 2%.

  6. Foreign investors (FIIs) are on a selling spree. Reportedly, in the last 14 sessions, FIIs have withdrawn a net Rs 183.4 billion from Indian markets. That's a lot of money...a lot more than the domestic mutual funds have been able to pump in. The intense selling pressure from the FIIs could only have contributed to this sell off.
  7. The Indian rupee today slid past 74 levels against the US dollar, increasing the risk-off sentiment.

    The rupee today traded in a range of 73.69 to 74.08 against the US dollar as compared to the previous close of 73.31. A falling currency is not great news at all.

  8. Even as there was negative news all around, hope emerged from oil. Oil slid on Friday as worries about demand for fuel being reduced by the global coronavirus outbreak were heightened. The fact that there was concern over non-OPEC (Organization of the Petroleum Exporting Countries) crude producers not yet having agreed to cut output further to support prices helped in the sell off.
  9. With today's fall the Index has lost 9% since the start of 2020.
  10. While the day ended deep in the red, some stocks stood out. Bajaj Auto, Maruti Suzuki and Asian Paints were among the few gainers.

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