A man reacts as he looks at a screen displaying the Sensex results outside the Bombay Stock Exchange building, Mumbai, March 12. REUTERS
Tracking sell-off in global equities, Indian market witnessed a knee-jerk reaction on March 16 pushing Sensex and Nifty50 below crucial support levels. The S&P BSE Sensex broke below 32,000 levels while the Nifty50 closed below 9,200 levels.
The benchmark indices saw the second biggest single-day loss today. The BSE Sensex was down 2,713.41 points or 7.96 percent at 31,390.07, while the Nifty50 crashed 757.80 points or 7.61 percent to 9,197.40.
The market breadth remained negative as about 5 shares declined for every share rising on the BSE.
The Indian rupee closed lower by 36 paise at 74.27 per dollar against Friday's close 73.91.
On the sectoral front, selling pressure was seen in banks, FMCG, IT, auto, metals, pharma and realty which all fell 4-9 percent.
We have collated a list of top factors which could be weighing on markets:
Global trend remains weak:
After a swift rally seen in US markets on Friday, things were looking promising for a stable Monday morning. But, Asian markets were trading weak tracking sharp selloff in Dow Futures.
US stock futures plunged 4.6 percent to hit their down limit and European markets were down 7-10 percent. at 16 hours IST.
Australia’s benchmark stock index fell 9.7 percent at close. Japan’s Nikkei, South Korea’s KOSPI, China's Shanghai Composite and Hong Kong's Hang Seng were down 2.5-4 percent.
US Fed's emergency cut spooks investors:
The US Federal Reserve and global central banks moved aggressively on Sunday to buttress a world economy unraveling rapidly amid the coronavirus pandemic, with the Fed slashing interest rates to near zero, said a Reuters report.
The US Fed slashed short-term rates to a target range of zero percent to 0.25 percent, and announcing at least $700 billion in Treasuries and mortgage-backed securities purchases in the coming weeks.
Depository institutions may borrow from this so-called discount window for periods as long as 90 days, pre-payable and renewable by the borrower on a daily basis.
“The Fed also said it would support U.S. banks that began to tap the capital and liquidity buffers they built up in the aftermath of the 2008 financial crisis and would reduce reserve requirement ratios to zero percent effective on March 26,” said the report.
Oil extends slide! Nears $30 a barrel
Crude Oil prices extended losses on Monday, slumping by more than $3.5 a barrel. Fall in crude oil prices suggests slowdown globally. Generally, an orderly decline in crude oil prices, which if occurs due to increased supply, is beneficial for the domestic economy, but in case of fears of a global slowdown it will result in a fall in equities as well.
"During the global financial crisis 2008, crude oil prices plunged nearly 70 percent in a span of seven months on demand concerns as the subprime crisis threatened the global economy and financial system," Praveen Singh, AVP, Fundamental Research – Commodities, Sharekhan by BNP Paribas told Moneycontrol.
"The sharp plunge in crude oil prices was mirrored in the global equities too as the common factor was the global slowdown. Thus, when it is the question of severe impact on the global economy, crude oil and wider markets can’t be seen separately," he said.
At 16 hours IST, international benchmark Brent crude futures fell 10 percent to $30.37 a barrel.
FPIs press panic button, withdraw Rs 37,976 crore:
Foreign portfolio investors (FPIs) have withdrawn a whopping Rs 37,976 crore on a net basis from the Indian markets in March so far amid the coronavirus pandemic triggering fears of a global recession.
Overseas investors pulled out a net sum of Rs 24,776.36 crore from equities and Rs 13,199.54 crore from the debt segment between Mar 2-13, depositories data showed.