Factors That Triggered Biggest Single-Day Losses On Indian Indices

Sensex and Nifty during trade on March 23, 2020 has been witness to the biggest one-day fall ever as the spike in corona positive cases and a virtual lockdown in the country triggered massive sell-off. Sensex sank to its 52-week low 26,241.44 while Nifty tanked to 7690.10. Infact in early trade after the Sensex shed 10%, trading was frozen for 45 minutes after the indices hit lower circuit.

Factors That Triggered Biggest Single-Day Losses On Indian Indices

Broader markets too were trading in the red with losses of between 10 and 12%.

Here are the factors that have triggered the highest one-day fall in the Indian markets:

1. Lockdown in India; Auto, Electronic Manufacturers Shutdown:

To stem the spread of coronavirus, state government have ramped up their efforts and announced a lockdown at least till March 31 in 75 districts where coronavirus infection has been reported. Andhra Pradesh, Punjab, J&K, Uttarakhand, Telangana, Jharkand, Himachal Pradesh are among the states that are under complete lockdown. Also, to tackle the issue, some of the leading companies such as Maruti Suzuki, M&M and electronics manufacturer have announced shut down of their manufacturing facilities. Similar shutdowns by other companies pose threat of a halt in economic activity.

2. Delay in Coronavirus Economic Relief Plan from the US:

As per a Bloomberg report the US President Trump as well as Congressional leaders said the deal on US stimulus against coronavirus inches closer that as per the top economic adviser of the White House would offer the US economy a relief of $2 trillion.The economic measure is intended to "keep companies together, keep workers paid, so they can live and sustain," Trump said at a White House briefing. "

3. Asian Shares, US Futures Tumble As Global Death Toll Rises:

Asian shares as well as US equity futures took a massive beating after the global death toll due to coronavirus continues to rise. Also, the failure by the Congress to decide on an aid plan as yet to fight the deadly virus has been pulling global markets down. As we write, Singapore's Straits Times is down 7.78%, while South Korea's Kospi and Hong Kong's Hang Seng are down 5.34% and 4.90%, respectively.

4. Sebi Curbs on Stock F&O Trading Fails to Curb High Volatility on Indian Indices:

After trading hours on Friday, the market regulator SEBI in order to curb wild volatility on the indices introduced certain curbs in stock F&O trading. Nonetheless, as suggested by experts the measures failed to curb volatility in the stock markets in trade on Monday. In fact India VIX rose to its highest in 12 years on March 23, 2020.

"Sebi's move to tighten short selling rules will affect a limited number of stocks at most, it will reduce volatility but not entirely. It is not a game changer in preventing short selling," said IIFL's Ayon Mukhopadhyay.

5. Rupee Sinks To 76 Per Dollar Level For The First Time:

Tracking weak global cues as well as negative sentiment on the equities, the home currency tumbled past levels of 76 per US dollar mark for the first time ever. This raises threats of further outflows from foreign portfolio investors (FPIs). So, far in the last weeks, FPI have net pulled out more than Rs. 50,000 crore from Indian equities.

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