Monday Mayhem marks Monday as the worst day for Sensex

On Monday mayhem the BSE Sensex ended on 1942 points lower at 35,635 while the NSE Nifty settled at 10,451, down 538 points. This marked the biggest crash in Sensex history. The stocks crash has been wiped out Rs. 6.50 lakh crore of equity investor’s wealth. 

Deepening of the fears about the spread of the coronavirus and a crash in crude oil prices tend to push down the domestic equity indices in Mumbai trading. Heavy selling by foreign investors and doubts over the stability in the Indian financial systems due to India’s fifth-largest private lender Yes Bank, dampened the mood. 

Oil price crash is another reason for the mayhem, the prices of crude oil have been tanked over 30% following Saudi Arabia’s decision to cut the prices and raise production after the talks with OPEC+ countries fell out, this has been marked as the biggest price crash since the first Gulf War. This has been led to the crash in the shares of the major energy firms in India including Reliance Industries and ONGC which fell up to 12 percent. The analysts have noticed that the oil price crash is highly negative for India, as it is largely depending on imports. 

As said by Viktor Shvets of Macquarie, “The impact is much more severe in areas that rely on oil prices. India cannot really tolerate too high oil prices, but neither can India tolerate it when oil prices are too low. India really needs a goldilocks situation. Net-net, for emerging markets, it means less growth, less reflation, greater pressure in high yield markets and higher spreads. Very low oil prices are negative for EMs, not positive.”

Covid-19 had created a panic in the Investors over the economic damage. There are around 100000 people who are affected by the coronavirus all over the world.  The Yes Bank crisis has raised concerns over the stability of the country’s banking system. Many of the financial entities have got exposure to YES Bank bonds that have been downgraded by the agencies who provide ratings. 

The continuous selling by the foreign institutional investors added to the woes of the Dalal street. Major equity markets across the world traded in the red, which has been discouraged the traders on Dalal Street. The energy stocks took a beating and E-Mini futures for the S&P 500 dived 4.89 percent.

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