Focus: GS-III Indian Economy
Why in news?
The Sensex on 9th March 2020 witnessed its worst fall since demonetisation in 2016 as the sell-off in stocks continues unabated.
The Nifty hit a one-year low.
5 factors causing this crash
Oil price crash
- Crude oil prices tanked over 30 per cent following Saudi Arabia’s decision to cut prices and raise production after the talks with OPEC+ countries fell out, marking the biggest price crash since the first Gulf War.
- This led to a crash in the shares of major energy firms in India.
Covid-19 panic deepens
- Investors panicked over the economic damage from the coronavirus outbreak. The number of people infected by the virus topped 1,07,000 across the world as the outbreak reached more countries.
Questions over financial stability
- The YES Bank crisis has raised concerns over the stability of the country’s banking system, adding to the woes of domestic investors, traders said.
- Many financial entities have exposure to YES Bank bonds that have been downgraded by rating agencies.
- Non-stop selling by the foreign institutional investors added to the woes of Dalal Street. In last 15 sessions, FPIs have withdrawn a net Rs 21,937 crore from Indian equities, NSE data compiled by Accord Fintech showed.
- February 24 onwards, FIIs have been net sellers of equities in India every day.
Global markets tumble
- Major equity markets across the globe traded in the red, discouraging the traders on the Dalal Street. Japan’s Nikkei fell 5.2 per cent and Australia’s commodity-heavy market tanked 6.4 per cent.