Biggest fall in Indian stock market for the second time in 7 months
The Bombay Stock Exchange (BSE) Sensex recorded a fall of 2.87% or 1,650 points in the last trading day of the week. The root cause of this is being told as a new variant of Corona. This is the second biggest fall of the market in the last 7 months.
The Sensex closed at 61,765 on 18 October. It closed in January at 48 thousand. On October 19, it had set a record of 62,245. Since then the Sensex has fallen by 5 thousand points or 8%.
BSE index closed at 57,107
The 30-share BSE index closed at 57,107. IndusInd and Maruti were the biggest contributors to the fall of the Sensex. IndusInd Bank shares closed down 6.01%. Shares like Maruti, Tata Steel, HDFC, NTPC, Bajaj Finance also fell heavily. On the other hand, the Nifty of National Stock fell 510 points or 2.91% to close at 17,026. In Nifty, Nifty Realty, Metal, Government Bank and Auto Index declined 6.26%. Here are the top reasons for the fall of the market.
New variant of corona
After the new variant of Corona surfaced in South Africa, investors started exiting from risky assets. However, not much information has been revealed about the new variant. But such variants have been found in South Africa, Botswana, Israel and Hong Kong. Scientists believe that this new variant has an unusual combination of mutations. There is a fear that this new variant may spread to other countries as well. This can again have a bad effect on the global economy.
Lockdown and restrictions again
Some European countries have already started anti-virus control this week due to the increase in corona cases. Austria has imposed a 10-day lockdown. Italy has banned people without a vaccine. The United Nations has already advised Germany and Denmark to be avoided. The 27-nation European Union has banned travel in their countries. The UK has also banned the arrival of flights from South Africa and 5 countries close to it.
Negative trends in global markets
In fact, there was a huge fall in the global markets on Friday. Simultaneously, the prices of crude oil went below $ 80 per dollar. European stock markets fell 2.7%. This is the biggest fall in these markets since September 2020. Among them, shares related to the travel and leisure sector fell heavily. The German market fell 3% and the UK market fell 2.7%. This is the biggest fall in these markets in a month.
MCI’s index of Asian stock markets fell 2.2%. This is the biggest drop since August. Shares in the casino and beverages sector fell heavily. Similarly, shares related to the travel sector fell more in Hong Kong, Sydney and other countries. Crude oil prices fell 5.7% to $78.38 a barrel. This is because new demand for oil could be impacted.
Withdrawal of foreign investors
Foreign investors have withdrawn money from the market for the seventh consecutive day. On Thursday, these investors had withdrawn Rs 2,300 crore and on Friday Rs 5,785 crore from the Indian market. So this is a negative environment for the market.
Rise in inflation
In the policy review of the US Federal Reserve Bank in October, it was said that inflation could increase. Investors fear that central banks around the world may withdraw economic relief. The US central bank has indicated that it may raise interest rates next year.
Market fell by 3,171 points in this week
The Indian stock market has broken more than 4% or 3,171 points in this week. Earlier on Monday itself, the market had fallen by more than a thousand points. The market had broken 2% that day and closed at 58,466. If we look at all these points, it is declining at the same pace as the market grew in September-October. Especially from the beginning of November.
7.35 lakh crore reduction in market cap
On Friday alone, the market cap has decreased by Rs 7.35 lakh crore due to the fall of the market. The market valuation of listed companies stood at Rs 258.31 lakh crore on Friday. Although it went up to Rs 274 lakh crore in October. There has been a shortfall of about Rs 16 lakh crore.
What investors do
The new variant of Corona is definitely a concern for investors. This may hinder the recovery of the economy. However, such a case has not come to the fore in India so far. But passengers coming from some countries are being screened continuously. Analysts expect the market to remain under pressure in the near term as well. However, it may show improvement in the medium to long term.
Stock market preferred medium of investment
By the way, since last year till now, the stock market has become a preferred medium for investment. Especially new investors invested a lot during this period and also earned money. Fundamentals of India are very good and for the last few quarters, along with the earnings of the companies, the gross domestic product (GDP) figures also increased. The GDP figures for the second quarter will come next week.
