As soon as the market opened on Thursday, March 12, there was such pressure that both Sensex and Nifty fell face down. Common investors who were hoping to make profits by investing their hard-earned money in the market, have suffered a major blow to their portfolios. After huge fluctuations throughout the day, Sensex fell 829 points and closed at 76,034, while Nifty slipped 227 points to 23,639. Midcap and smallcap shares also recorded a decline of about 1 percent.
Investors lost Rs 10 lakh crore
Due to this sharp selling, there was a decline of about Rs 10 lakh crore in the wealth of investors. On Thursday, the total market capitalization of companies listed on the Bombay Stock Exchange (BSE) declined from about Rs 450 lakh crore to about Rs 440 lakh crore. There is not just one reason behind this upheaval, but many negative news coming from all over the world have badly spoiled the mood of the Indian market. Let us understand why there is so much panic in the market and what are the reasons that have increased the pressure on the market.
Crude oil prices increased
The skyrocketing prices of crude oil have given the deepest wound to the market. Internationally, Brent crude oil has once again reached close to $ 100 per barrel, with a jump of almost 9 percent. The news of Iran’s attack on ships carrying oil in the Strait of Hormuz has created a deep crisis regarding the energy supply chain across the world. The International Energy Agency (IEA) announced the opening of its emergency oil reserves on a large scale for the first time in history, but this too did not have any significant impact on prices. India imports most of the oil it needs, so expensive crude directly means increase in inflation in the country.
Heavy withdrawal of foreign investors
On the other hand, foreign institutional investors (FIIs) are also withdrawing from the market. In the month of March alone, they have already withdrawn more than Rs 39,100 crore. Selling for the ninth consecutive day, he sold shares worth Rs 6,267 crore. Although domestic investors (DIIs) are definitely trying to control the market, the pressure to withdraw foreign funds is very high.
Fear of America’s ‘trade war’ policy
Investors are not getting any relief news from the global market also. From Asian markets to American stock market, there is an atmosphere of sluggishness and red marks everywhere. Due to the fear of disruption in the supply of crude oil, the fear of inflation has started troubling the entire world again. Meanwhile, the strict tariff policies of US President Donald Trump have doubled the concern.
America has started a new investigation of “unfair trade” against 16 countries including India. It is believed that this is a sign of the return of aggressive trade policies of the Trump administration. This step is expected to have a negative impact on international trade. Due to this uncertainty regarding global trade, the confidence of investors has been shaken.
Historical fall of rupee
The rising prices of crude oil has directly hit our currency. On Thursday, the Indian Rupee weakened by 30 paise to reach 92.34 against the US Dollar, which is very close to its all-time low (historical low). Weak rupee is a cause of concern for both the common man and the economy, because it increases the import bill and there is a danger of increasing the current account deficit.
The extent of fear in the market can be accurately gauged by looking at the ‘India VIX’ index. This is called the ‘fear scale’ of the stock market. On Thursday, there was a huge jump of about 6 percent and it reached the level of 22.32.
Disclaimer: This article is for information only and should not be considered as investment advice in any way. TV9 Bharatvarsha advises its readers and viewers to consult their financial advisors before taking any money-related decisions.