Fearing the spread of coronavirus, the country’s markets opened with a sharp decline. Due to which the lower circuit had to be installed in the market within the first half an hour. BSE slipped 10% or 2991.85 points to reach 26,924.11. Similarly, the Nifty moved 9.63% or 842.45 points down to 7,903. However, when the market resumed trading 45 minutes later, the decline further increased. Right now the Sensex is down 3531.66 points at 26,384.30 and the Nifty is trading 1,016.25 points down at 7,729.20. Earlier, on March 13, the market also had a lower circuit. However, recovery was also done that day.
3 reasons for market decline
1. Due to the spread of coronavirus infection, many states of the country have been lockeddown till 31 March.
2. Foreign investors are continuously withdrawing money from the Indian market. In about two weeks, they have sold shares worth Rs 50,000 crore.
3. Markets worldwide are declining due to fear of spreading coronavirus infection. The Hong Kong market saw a 5% decline.
Lower circuit means, very bad market time
The circuit was started following the July 2001 SEBI guidelines. The circuit is put in place to stop the sudden ups and downs in the Indian stock market. There are two types of these. Upper Circuit and Lower Circuit. The upper circuit is placed when the market exceeds a set limit. And when the decrease exceeds the same limit, a lower circuit is used. SEBI has fixed three trigger limits for the circuit at 10%, 15% and 20%. That is, 10%, 15% and 20% of the market that is on the market at the time – the circuit starts. On Friday, after the sharp fall in the market, the lower circuit was put in the Sensex.
Trading is stopped for 45 minutes when the stock market falls or rises by 10% before 1 pm.
If there is a 10% fluctuation after 1 pm, the business is stopped for only 15 minutes.
If the stock market fluctuates 15% before 1 pm, trading is stopped for 1 hour and 45 minutes.
If there is a 20% fluctuation in the stock market at any time during trading, then the trading is stopped for the rest of the day.
Lower circuit in Sensex for the second time in 10 days
The first opportunity came on 21 December 1990, when the Sensex lost 16.19%. The stock market reached a level of 1034.96 after this decline.
The second biggest drop in the SENSEX was on 28 April 1992. The Sensex was then down by 12.77%. The stock market closed that day at 3896.90.
The third opportunity came on May 17, 2004, when the stock market lost 11.14%. The stock market then closed at the level of 4505.16.
On 24 October 2008, the Sensex was down by 10.96%. The stock market closed that day at 8701.07.
On 13 March 2020, the circuit was hit due to a 10% drop, but the Sensex improved in the subsequent business. The Sensex had closed at 34,103.48 points on that day.
Market cap reduced by Rs 10 lakh crore
Due to the sharp decline in the Sensex, the market cap of companies listed on BSE has decreased by Rs 10 lakh crore. After the market closed on Friday, the market cap was Rs 116.09 lakh crore, which has now come down to Rs 105.91 lakh crore.
Rupee slipped below 76 for the first time
The rupee opened at 75.69 against the dollar and slipped below 76 shortly. This is the lowest level ever.
The market was up on Friday
The country’s markets closed in the lead on Friday due to the steps taken by the government and RBI. The Sensex gained 1627.73 points to 29,915.96 points and the Nifty closed 482.00 points higher at 8,749.70 points. At the same time, there was a decline in American markets. The Dow Jones dropped 913 points to close at 19,174. Similarly, the Nasdaq Composite was down 271 points at 6,879.52. The S&P fell 104 points to 2,304.92 points.
Oil companies loss up to 8.5%
The petrol-diesel consumption will come down due to the lockdown. Fearing this, investors are selling shares of oil companies.
Fall in company share
Hindustan Petroleum 6.43%
Indian Oil 4.23%
Banking sector shares fall by 12%
Axis Bank 12.72%
ICICI Bank 11.80%
Bank of Baroda 6.17%
Kotak Mahindra Bank 6.15%
Ipca Labs shares up 18%
Contrary to market downturn, shares of some pharma companies have gained momentum. Ipka Labs shares climbed 18%. On Friday, there was a rise of about 8.5%. The stock of Dr. Path Labs is also seeing a 3% gain.