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What made Sensex, Nifty hit lower circuit today? Here are the key factors

All constituents of Nifty and Sensex were trading deep in the red.

Last Updated: Mar 13, 2020, 10.46 AM IST
More than 4,613 people have died and over 126,000 have been infected globally with the coronavirus.
Bears ran amok in the first few minutes of trading on Dalal Street on Friday as benchmark indices hit 10 per cent lower circuit, forcing a halt in trading.

BSE flagship Sensex was down 3,091 points to below 30,000 levels. It was stuck at 29,687. NSE barometer Nifty plunged 10.07 per cent to 8,624.

All constituents of Sensex and Nifty were trading deep in the red with HCL Tech, Tech Mahindra and Kotak Mahindra Bank down as much as 15 per cent each.

“Over the last few days the Indian stock market has been moving in tandem with other global markets owing to concerns relating to Covid-19 pandemic, resultant fear of economic slowdown, recent fall in global crude oil prices, etc,” said a statement from market regulator Sebi.

Here are the key factors drowning the market:

Coronavirus: First death in India
A rapidly spreading coronavirus took the first life in India as a 76-year-old man from Karnataka's Kalaburgi tested positive for Covid-19. The country has reported a total of 77 positive cases of the infection.

More than 4,613 people have died and over 126,000 have been infected globally, according to the World Health Organisation (WHO).

The WHO had declared the new coronavirus outbreak a pandemic, sounding alarms in the markets across the world. A pandemic is an epidemic of worldwide proportions, affecting most countries.

Economic slowdown?
With coronavirus hitting businesses, and travel across borders coming to a virtual halt, already subdued growth rate may dip further. Signs of trouble are already visible.

Hiring activity remained flat during February compared to the same month last year, mainly due to sluggishness in sectors like insurance, hospitality and travel, according to a Naukri.com report.

The Confederation of Indian Industry said tourists cancellations have reached up to 80 per cent in some locations and the value at risk from this segment will be in multiples of tens of thousands of crores.

Gems, jewellery exports from India have dropped 20 per cent.

Globally, the outbreak could cost the global economy up to $2 trillion this year, the UN's trade and development agency said, warning that shock from the pandemic will cause a recession in some countries and depress global annual growth to below 2.5 per cent.

Oil headed for worst week in 29 years
Oil prices fell on Friday for a third day, with Brent crude set for its biggest weekly drop since 1991 and US crude heading for the worst week since 2008 as panic about plunging demand from the coronavirus outbreak grips the market.

Brent crude was down 47 cents, or 1.4 per cent, at $32.75 a barrel by 0317 GMT after falling more than 7 per cent on Thursday. For the week, Brent is set to fall nearly 28 per cent.

Analysts see the oil price crash as largely negative for India despite it heavily depending on imports.

Viktor Shvets of Macquarie is one of the analysts that say India cannot tolerate high oil prices, but neither can India tolerate it when oil prices are too low. He believes that for emerging markets, a lower crude prices means less growth, less reflation, greater pressure in high yield markets and higher spreads.

FIIs continue dumping stocks
Net-net, foreign portfolio investors (FPIs) have dumped domestic shares worth nearly Rs 24,000 crore in March till now. Net-net, foreign portfolio investors (FPIs) were sellers of domestic stocks to the tune of Rs 3,475 crore on Thursday, data available with NSE suggested.

Meanwhile, DIIs have been pouring money to buy shares at cheap rates. They were net buyers to the tune of Rs 3,918 crore, data suggests.

Global shares falling like ninepins
Global stock markets crashed ending their long bull run, with coronavirus panic selling hitting almost every asset class and leaving investors nowhere to hide. Japanese stocks were in freefall and markets from Seoul to Jakarta punched through downlimit circuit breakers.

The Nikkei dropped as far as 10 per cent. Australia's benchmark fell as far as 8 per cent and is set for its worst week on record. In South Korea the won was shredded and the Kospi fell 7.7 per cent. Hong Kong's Hang Seng index fell 5 per cent. China's Shanghai composite fell 3 per cent.

Trade was halted on the S&P 500 overnight after it hit circuit breakers. It fell further when trade resumed, eventually losing 9.5 per cent to close 27 per cent below February's peak.
(What's moving Sensex and Nifty Track latest market news, stock tips and expert advice on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds.)

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