Sensex today: Sensex crashes 1,942 points: main reasons behind this slide | India Business News
Sensex added 1,942 points or 5.17 percent to close at 35,635, marking the highest single day’s decline in terms of points. The BSE index fell 2,400 points to reach a minimum of 35,109 during the day. The previous sharp decline, in absolute terms, was recorded when sensex had dropped 1,624 points to close at 25,741 on August 24, 2015, followed by the immersion of 1,448 points that were recorded on February 28 of this year.
The carnage in the stock market ended the wealth of investors worth Rs 6,88,523.1 rupees, bringing the total cap to Rs 1,37,42,701.31 rupees in BSE. The maximum limit of the companies listed on the BSE was Rs 1,44,31,224.41 rupees at the end of Friday’s negotiation.
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The broader Nifty NSE also fell sharply and collapsed 538 points or 4.90 percent to reach 10,451.
The main laggards in the BSE package include ONGC, Reliance Industries, IndusInd Bank, Tata Steel, TCS and State Bank of India (SBI) with a stock drop of up to 16.55 percent.
Reliance Industries Ltd shares fell 12.35 percent and witnessed the worst percentage decline since October 2012 due to the drop in crude oil prices.
In NSE, all sub-indices were traded in red with Nifty Metal, Media and PSU Bank, falling to 7.72 percent.
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On Friday, sensex had plummeted 894 points in broad-based sales and Nifty settled 280 points below.
These are the main reasons behind the dive:
Coronavirus: The virus outbreak has now infected more than 1.07,000 people worldwide, claiming more than 3,300 lives and disrupting business supply chains.
A massive sale caused by the economic consequences of the virus outbreak has eliminated 9 percent of Nifty in the last two weeks.
“You can’t rule out the possibility of Nifty going down to less than 10,000. Some clarity is required about the coronavirus,” Anita Gandhi, director of Arihant Capital Markets in Mumbai, told Reuters.
On the global front, markets also collapsed even more as panic investors fled to bonds to cover the economic shock of the coronavirus.
“Today’s price action puts the fiscal health of the vast majority of sovereign producers at risk and budget cuts and the increase in the debt burden are now approaching in the event of a prolonged period of low prices,” Helima Croft, director of global commodity strategy at RBC Capital Markets, told Reuters news agency.
Yes banking crisis: Investor sentiments also weakened amid the current crisis of private lender Yes Bank. The Compliance Bureau (ED), a central investigation agency, arrested Yes Bank’s founder Rana Kapoor on Sunday after interrogation hours and searches at his and his daughters’ residences in Delhi and Mumbai.
In addition, the Central Bureau of Investigation (CBI) raided seven places on Monday in connection with a case of cheating and corruption registered against Rana Kapoor and the promoters of Dewan Housing Finance Corporation Ltd (DHFL).
All looted stores in Mumbai belonged to the Kapoor family, DHFL promoters Kapil Wadhawan and his brother Dheeraj Wadhawan, aka Baba Dewan.
It is alleged that Kapoor received a bribe of Rs 600 million rupees from Wadhawan through the company of his daughters DOIT Urban Ventures instead of Yes Bank extending the investment of loans and obligations collectively worth Rs 4.500 crore in DHFL .
Analysts have said that markets are likely to remain under pressure in the week shortened by holidays and that investors follow the crisis of Yes Bank and the outbreak of coronavirus that have cast a shadow on trade.
On Thursday, the Reserve Bank of India (RBI) took control of Yes Bank and said it would work on a revival plan. SBI said Saturday that it would invest funds to buy a 49 percent stake in Yes Bank as part of the initial phase of a bailout agreement for the troubled lender. The hope of rescue raised the bank’s shares by more than 31 percent on Monday.
The private bank is the third major Indian financial institution to get rid in the last six months, after RBI movements to take control of Dewan Housing and the Punjab & Maharashtra Cooperative Bank (PMC).
Fall in oil prices: Oil prices fell around 30 percent after Saudi Arabia reduced its official sales prices and established plans for a dramatic increase in oil production next month, starting a price war even when the spread of the coronavirus erodes World demand growth.
Prices fell to a third after the Saudi Arabia measure after Russia opposed making a new production cut proposed by OPEC (Organization of Petroleum Exporting Countries) to stabilize the oil markets affected by concern over the impact economic of the coronavirus.
FII outputs: On a net basis, foreign institutional investors sold shares worth Rs 3,594.84 crore, while national institutional investors bought shares worth Rs 2,543.78 rupees on Friday, data available with stock exchanges .
The incessant outflow of foreign funds scared market participants, operators said.
Note: National stock markets would remain closed on Tuesday for ‘Holi’.
(With agency contributions)