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Tuesday, November 30, 2021

Explained: Why Indian markets are in the red

While all the 30-stocks that make the benchmark Sensex at the BSE fell in Friday morning trade, the banking index was leading the fall.

Written by Sandeep Singh , Edited by Explained Desk | New Delhi |
Updated: March 6, 2020 11:21:35 am
Sensex, Nifty in the red over coronavirus, RBI decision on Yes Bank At the Bombay Stock Exchange (BSE) in Mumbai. (Express File Photo: Nirmal Harindran)

The Sensex at the Bombay Stock Exchange fell by up to 1,459 points or 3.8 per cent on Friday and the rupee crashed 52 paisa against the dollar to trade at a 17-month low of 73.87 as both domestic and global factors hit the sentiments.

While RBI’s move to supersede Yes Bank board and imposition of withdrawal cap of Rs 50,000 did hurt the confidence on India’s banking and financial sector, the sharp fall in Asian markets on Friday morning on account of growing concerns over economic impact of coronavirus spread also played a role.

Explained: Behind the fall in Indian markets

While all the 30-stocks that make the benchmark Sensex at the BSE fell in Friday morning trade, the banking index was leading the fall. As concerns grew over the financial sector following RBI’s move on Yes Bank Thursday evening, the BSE Banking index fell 4.15 per cent. Even the BSE finance index fell 3.98 per cent in the early trading hours.

Yes Bank was trading at Rs 25.8, witnessing 30 per cent fall in its share prices.

Global stocks fall over spread of coronavirus

The fall in Indian markets was also triggered by the decline in major Asian markets following concerns over spread of coronavirus and its impact on global economic growth. While NIkkei in Japan fell 2.9 per cent, Hang Send in Hog Kong and Shanghai Composite in China were down by 2.15 per cent and 1 per cent respectively.

Earlier, Dow Jones Industrial index in the US fell 3.6 per cent to close at 26.121 on Thursday.

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What to expect

The markets are expected to witness volatility in the near future, given the spread of coronavirus across over 80 countries and its economic impact. As countries are closing their borders and trade and businesses are getting impacted, the revival in markets will depend upon how quickly the spread of the virus is controlled in respective geographies. Here’s the latest news on the coronavirus outbreak

As for India, domestic factors such as fall of Yes Bank, DHFL, IL&FS, Jet Airways and many others only make the situation worse. Experts say that the weakness and lack of confidence in the banking and finance sector may hurt India’s economic growth revival and the finance market in general.

Don’t miss from Explained: Why has EPFO cut interest rate to 8.5%? How will you be impacted?

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