The BSE Sensex crashed by 2,400 points on Tuesday. By the time it turns 4.30 today – the time when the markets close – this piece will have been published, and chances of the markets dropping further are highly possible.
The spread of coronavirus, the global oil prices, and the YES Bank fiasco are three of the major factors that have seen the week begin with the worst market drop in the history of the stock market.
To understand these factors better, let’s try and understand these three factors better
The spread of coronavirus: As of now, the world has witnessed 1,10,044 cases. Of this, 3,825 deaths have been reported, while 62,053 people have recovered. Yet, the coronavirus epidemic that has put fear into millions across the world has affected several industries. As we were typing this, 10 more cases were confirmed in the Philippines. In comparison, according to the World Health Organization (WHO), a total of 8,098 people worldwide became sick with SARS during the 2003 outbreak. Of these, 774 died.
Naturally, investors have panicked. An Economic Times report says that experts have indicated that the total loss due to the spread of COVID-19 could go up to $2.4 trillion. Of this, $211 billion of APAC economies would be affected.
The YES Bank crisis:
The YES Bank crisis has created several concerns over the stability of India's banking sector.
YES Bank reported a quarterly loss of ₹600 Crore in Sep 2019. YES Bank at this point needed a large capital infusion to stay afloat. At the end of the day, RBI stepped in to stop the situation from spiralling and has superseded the Board.
Oil price crash
Oil plunged over 20 per cent Monday after top exporter Saudi Arabia launched a price war in response to a failure by leading producers to strike a deal to support energy markets.
The two main contracts both lost about a fifth of their value in morning Asian trade, with West Texas Intermediate sliding to about USD 32 a barrel and Brent crude to about USD 36 a barrel.
Saudi Arabia launched an all-out oil war Sunday with the biggest cut in its prices in the last 20 years, Bloomberg News reported, after a failure by cartel OPEC and its allies to clinch a deal to cut production.