Market volatility continues, will there be another collapse in Indian stocks?
The coronavirus pandemic has caused panic among major markets worldwide as these markets crashed hard over the past month. The virus particularly struck the Indian market as it crashed, ending a yearlong bull run. Lately, there has been panic selling taking place, which has hit every asset class leaving investors and forex brokers with nowhere to hide.
The continuing rise of new cases of coronavirus in India has ensured bears are in control on Dalal Street as most benchmark indices tumbled. Ever since, the US president decided to ban travels from Europe and other affected areas without offering a concrete plan on how the country will tackle the pandemic, whether medically or economically, that has hurt the American markets.
So, it came as no surprise when the Indian market started the week weakly given major global markets were already gripped in bearish momentum.
The year-long bull run was expected to come to an end; however, no one expected the Sensex and the Nifty to go below 10%. The market closed last week, bleeding, and there has been minimal improvement as of this week.
Market Performance Over The Past Week
Last week Sensex fell by 3,090 points, almost 9.43% at 29,687, while Nifty dropped more than 10% below 8,700. The development comes during a time when investors and forex brokers around the world are sitting on the edge due to the coronavirus outbreak.
By Friday 10:05 am, Sensex had declined by more than 10% or 3,500 points while Nifty was down 11% or by more than 1,000 points.
The past week was one of the worst for domestic markets in India in history, a sentiment that has been reflected across global markets, which have also registered record falls over consecutive trading sessions.
The uncertainty of the impact of the coronavirus means volatility is expected to remain within major markets. Even the move by the US federal reserve and several other central banks around the globe to inject liquidity in markets have not been enough to calm down the fear that has seen over $14 trillion wiped off world stocks in less than a month.
Throughout Asia, the markets were also in the red. Nikkei N225 dropped by 10% and was on course for its worst week since the 2008 financial meltdown. There wasn’t a single stock on the index that was in the green.
Outside Japan, the losses were equally staggering, driving the broad Asia-Pacific index back to where it was back in 2017. Also, oil and gold fell, and even sovereign bonds once regarded safe slumped as investors looked to liquidate everything they could to cover their losses.
The Charts Show Sharp Drops
Taking a look at the charts, over the past month, we see a sharp drop due to the coronavirus on the Sensex, which is the benchmark index in India.
It’s the same case for Nifty. Over the past month, there has been a downward spiral. Which is confirmed on the five-day charts with a little bit of recovery after a while. This kind of volatility is expected to continue on the two indexes, and with the volatility graph going so high, it indicates a good opportunity in the market.
However, some experts believe until we see some recovery, whether it's on the American market, European, or Asian markets, its highly unlikely we will see the Indian market recover as envisioned.
For now, it’s safe to forget about the bull run and the levels we saw when the market went on a bull run. Expect the levels to be down but also expect to see a fair bit of recovery as other major markets recover.
For now, the market is bleeding since there is a lot of panic selling going on, however, expert’s advice that we shouldn’t be afraid since as long as the fundamentals are strong, there will be a fair bit of recovery soon.