No Boom, Only Bust!
During the fortnight, the global and domestic market sentiments were filled with severe panic across investors as the stock markets witnessed a bloodbath. On March 9, 2020, Sensex reported its biggest ever single-day drop (in terms of points) as it crashed by over 1,941 points. Dow Jones Industrial Average (DJIA) witnessed a fall of more than 2,000 points, which is a fall of more than 7 per cent in a single-day for the first time ever. Since massive sell-offs triggered a key market circuit-breaker minutes after the opening bell, FTSE 100 also experienced its biggest fall since the 2008 crisis. Many stocks globally were seen to have reached their new 52-week lows since the 2008 crisis.
This extreme volatility in the markets was seen due to the rapid spread of Coronavirus with Italy implementing a lockdown. With factories across the globe remaining shut and increasing restrictions on movement, many feared this supply and demand shock will cripple global economic growth and lead to recession. In an attempt to drive rivals such as Russia and the US out of the oil market, Saudi Arabia made a shocking decision to ramp up oil production, thus causing a massive crash in the oil prices.
As a reflection of the chaos, global indices were trading in red with DJIA, S&P 500 and NASDAQ down by 14.70 per cent, 14.86 per cent and 13.78 per cent respectively. European indices FTSE 100, DAX and CAC 40 dipped the most, down by 16.64 per cent, 18.49 per cent and 18.72 per cent. Hang Seng index and Shanghai index decreased by 6.64 per cent and 2.90 per cent whereas Nikkei registered a fall of 15.77 per cent.
As for the domestic markets, Sensex and Nifty were down by 11.71 per cent and 11.65 per cent, respectively as a result of the massive fall in global indices. All of the domestic sectoral indices registered a fearful crash during the fortnight as well. The Small-Cap and Mid-Cap indices were down by 12.01 per cent and 12.24 per cent, respectively. The Coronavirus has mainly created supply chain disruptions on a huge scale with manufacturing and production yet to make a comeback to normal. As a result, the Metal index was heavily impacted with a huge drop of 18.35 per cent over the past few weeks. Realty and Bankex declined by 13.14 per cent and 13.08 per cent respectively. Auto index suffered by a decrease of 10.81 per cent and so did IT and FMCG indices by 10.03 per cent and 7.44 per cent. The major single-day slips of many global indices resulted into huge falls of sectoral indices as well.
In its biggest decline since the start of the Gulf war in 1991, Brent crude oil price plummeted by 24.09 per cent at USD 34.36 per barrel on March 9, 2020 from USD 45.27 per barrel as on March 6, 2020. It decreased by 33.26 per cent from USD 55.77 per barrel to USD 37.22 during the fortnight and by 20.38 per cent since the beginning of the month. At such times, with an increase in the investors’ confidence in gold, its price rose by 1.27 per cent to Rs45,300 for 10 grams of 24 carats in the last 15 days and by 4.21 per cent since the beginning of the month. On March 8, 2020, Indian rupee touched a 17-month low of 74.17 against the US dollar. FIIs took a stance of being net sellers to the tune of Rs21,408.51 crore whereas DIIs were net buyers to the tune of Rs 31,053.4 crore.
