5 Factors Behind Sensex & Nifty's Biggest Ever Fall

The mayhem in the markets is not ebbing and one can never be sure how long the crisis would persist. Still, today's 2900 points decline on the Sensex and Nifty declining to 9600 levels is primarily attributed to some of the below listed reasons:

Sensex Crashes 2500 Points; Nifty Holds 9700: Factors Battering Markets

1. US Markets in the Bear Market Territory:

After the WHO declared the outbreak of coronavirus as the pandemic, the markets across the world were rattled. On Wednesday, the Dow lost a massive and announced its entry into the bear market for the first time since financial crisis. Nonetheless, Asian markets also in Thursday's trade sinking by more than 4%, Nikkei while reporting was down as much as 4.32%, Hang Seng was also down 3.9%.

European markets which saw some recovery after the central bank there cut rates by 0.5% have also been pared in today's trade with FTSE dragging as much as 4.52%.

2. No Respite on Crude:

With an haul on travel and other constraints on the back of coronavirus, there is unlikely to be any demand growth for crude. After Monday's carnage in crude by 30% to levels seen in 1991, the commodity has again cracked by 6% following yesterday's decline of 4%. Brent crude is priced at $34 per barrel, down by as much as over 4%.

3. Heavyweights and Blue-Chip Stocks Weigh:

RIL and HDFC twins and even all of the Nifty stocks have been battered heavily amid the sell-off. This clearly indicates investors are wary of the instability the markets have created.

Stocks like Bhel have touched a 17-year low, ONGC has hit 16-year low, while others including Indiabulls Housing is dragged to a record low amid the market sell-off and over 100 stocks have lost as much as 50% in value from their 1-year peak levels.

4. Coronavirus now declared pandemic:

Given the increase in infected cases as well as toll due to coronavirus outbreak all across the globe, there is a dampener on the economic growth sentiment. Also, given the severity and its spread across over 100 countries, WHO has made a mention that coronavirus can be characterised as a pandemic.

In India, the cases of coronavirus have now spiked to 73 with Kerala being declared as the epicentre of the infection with 17 cases.

5. Travel Advisory issued by Govt.:

All foreign visas will stand suspended until April 15, 2020 from March 13, 2020. So, individuals with OCI cardholders will not be able to travel into India who utilised visa-free travel. Nonetheless, people who are out from India, will be able to come back to the country. This is likely to hit business and trade so the sentiment weigh on the streets too.

6. FIIs Continue to Sell into Indian Markets:

As per the data, on a month to date basis, foreign institutional investors have sold into Indian equity markets worth Rs. 20,000 crores.

So, given the current sentiment, the investors might prefer staying with their capital than on betting on either of the asset classes including gold which is also not gaining appeal as a safe haven in such volatile times.