Losses worth Rs 8 trillion in Monday’s Sensex, Nifty tumble

The S&P BSE Sensex and Nifty50 indices crashed on Monday morning by 1,811 and 551 points. The intraday low touched 47,780 and 14,283 level respectively. Within minutes the investor’s pockets were impacted by nearly Rs 8 trillion rupees. The volatility gauge index(VIX) shot up to 11% in the intraday. 

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The decline in Reliance Industries, ICICI Banks, SBI, Bajaj Finances, TCS, Infosys and HDFC Bank contributed to nearly 1,132 points in the intraday Sensex fall. 

So, what caused the crash? Here are a few probabilities:

The surge in coronavirus cases: 

Just when we were seeing greenshoots of recovery after COVID-19 vaccine came into circulation, the second more aggressive wave hit India. The COVID-numbers are growing every day by more than 1.5 lakh cases forcing several states to impose fresh restrictions, including weekend lockdowns. As prospects of full lockdown loom in key cities — Mumbai and Delhi — markets are also getting jittery. 

The economically crucial state of Maharashtra has accounted for 37% of the total coronavirus cases on Sunday with over 63,000 new cases in its highest ever single-day surge along with 349 deaths. The state Health Minister  Rajesh Tope has announced that the rising numbers call for an extended lockdown period. The National capital Delhi is also seeing more strict covid restrictions like night curfews, capacity constraints in public gatherings, mandatory testing for travellers etc. 

Trends in FPI 

Considering the long road ahead for the economic recovery, the Foreign Portfolio Investors (FPIs) have withdrawn a net Rs 929 crores. The funds have been pulled out from the equity and the debt segment Rs 740 crores and Rs 189 crores respectively. 

 Bank shares on the edge 

The second wave ushers in a time of massive economic fall as both our private and public sector banks face the heat. The Nifty Bank index came crashing from 1,613 to 30,835, a level last seen in January 2021.  The public sector banks were hanging on a thread while incurring loss with their shares tumbling down to six per cent to nine per cent.