Stock markets in India crashed on 9th March, 2020 as Sensex and Nifty indices saw their biggest ever fall in absolute terms.
The Sensex dropped 1,942 points or 5.17% to 35,635 and the Nifty dropped 538 points to 10,451, wiping out as much as Rs 6.8 lakh crore of investor wealth.
According to the Securities and Exchange Board of India (SEBI), volatility in stock market is due to perceived economic fallout from COVID-19 and steep fall in global crude prices
2. WHAT IS STOCK MARKET?
• A stock exchange is an organization which provides a
platform for trading shares- either physical or virtual.
• The origin of the stock, market dates back to the year
1494, when the Amsterdam Stock Exchange was first set
up. In a stock exchange, investors through stock brokers
buy and sell shares in a wide range of listed companies.
• A given company may list in one or more exchanges by
meeting and maintaining the listing requirements of the
stock exchange
3. History of Stock Exchanges of India.
• The first company that issued shares was the VOC or Dutch
East India Company in. the early 17th century (1602). Since
then we have come a long way. With over 25m shareholders
today, India has the third largest investor base in the world
after the USA and Japan. Over 9,000 companies are listed on
the stock exchanges, which are serviced by approximately
7,500 stockbrokers. The Indian capital market is significant in
terms of the degree of development, volume of trading and
its tremendous growth potential.
• Stock exchanges provide an organized market for
transactions in securities and other securities. There are 24
stock exchanges in the country, 21 of them being regional
ones with allocated areas.
4. TWO MAJOR STOCK EXCHANGE IN INDIA
Bombay Stock
Exchange
National Stock
Exchange
5. CORONAVIRUS IMPACT ON STOCK MARKET
• The effect of the virus in India was first felt at the end of
February. On 28th February, the Indian share market saw a
massive crash; more than Rs. 5 lakh crores in investor’s
wealth was wiped out, attributable to the Coronavirus scare.
The Indian indices registered a 3.5% fall which was the
second-biggest fall in the history of the Sensex.
• The Indian stock market recovered its losses on 2nd March,
but with recent cases of coronavirus being reported in India,
the markets again ended on a negative. As of 9th March
2020, the Sensex crashed by over 1900 points in one day.
This is considered the most significant intra-day decline since
August 2015.
• The stock market has historically been prone to fear
psychoses, and this is one such instance. However, there are
legitimate reasons for the Indian stock market to worry and
one such worry is China’s role in the supply-demand chain in
both, India and globally.
6. GROWTH DOWNGRADE
Many brokerage houses which had predicted an impressive
economic growth for India in FY22 have downgraded their
forecast in the wake of the second wave.
This has amplified negative sentiment among investors who
are worried about the impact of the second wave on the
economy.
The second Covid-19 wave has already overwhelmed the
healthcare system and is gradually derailing economic
recovery as more state governments continue to extend
Covid-related curbs. Nomura, JP Morgan and UBS are some
brokerage houses that have lowered their GDP forecast for
India.
7. WILL STOCK MARKET CRASH AGAIN
IN 2021?
Stock market opened the week in red amid growing
fears of complete lockdown in Maharashtra and other
states as Covid-19 cases continue to rise.
Today's market crash has triggered worries of a
scenario like last year's when nationwide lockdown had
left the stock market bleeding with benchmark indices
plummeting around 40 per cent in a span of two
weeks.
In any event, investment experts believe, long term
investors should not worry about temporary blips and
continue to invest aggressively in a systematic manner.
