Biggest One-Day Fall for Indian Indices, Crash in Crude Oil Prices, and Top Cues in Focus Today

Wed, 11 Mar Pre-Open

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It was mayhem on Dalal Street on Monday. India share markets traded deep in the red as Sensex and Nifty posted their biggest one-day fall ever in absolute terms.

Losses were see tracking a sell-off in global markets as a new wave of fear about the spread of the coronavirus and its economic impact gripped investors. The sharp fall in crude oil prices also intensified selling.

At the closing bell on Monday, the BSE Sensex stood lower by 1,941 points (down 5.2%) and the NSE Nifty stood down by 538 points (down 4.9%).

The BSE Mid Cap index ended the day down 4.7%, while the BSE Small Cap index stood down by 4.2%.

All sectoral indices ended deep in the red with stocks in the metal sector, IT sector and energy sector witnessing maximum selling pressure.

The Sell-Off in Indian Share Markets...

Note that, Indian stock markets had collapsed on Friday too...and while there was some recovery towards the end, we still ended deep in the red. We wrote about what led to this crash in 10 points in this latest article titled: Today's Stock Market Crash: 10 Points.

In one of the recent podcasts, we had shared a special episode from investor hour...

In this emergency episode of the Investor Hour, Rahul Goel talks to Vijay Bhambwani, who he calls India's #1 trader.

Vijay dives deep in this "coronavirus" situation and presents a picture which we believe would be extremely beneficial to any investor or trader.

They talk stocks, commodities, bullion and currency.

For each of these assets, they talk what's around the corner, and how one should position oneself for potential gains.

Whatever you do, don't miss this emergency issue of the Investor Hour!

Listen in here...

Towards the end, Vijay shares a very unique perspective on how to allocate assets. Don't miss that!

Also, here's what Tanushree Banerjee wrote about the coronavirus and stock market situation in a recent edition of The 5 Minute WrapUp...

• While manufacturers dependent on China are expected to take a hit globally, the short-term impact is also likely to be felt on sectors like travel and tourism.
  
  In the long-run though, India could emerge as a long-term alternative to the world's supply needs.
  
  A potential megatrend that I will be keenly keeping an eye...

Tanushree is counting on 7 top stocks from the Indian stock market that will benefit from this megatrend.

As per her, now is the right time to buy these stocks to profit from the Rebirth of India. You can read about them here.

In here latest video, she has recommended steps to buy multibaggers stocks of the next decade amid the current stock markets correction.

Tune in to find out more...

Crude Oil Prices Tank 30%

Crude oil prices tanked over 30% on Monday after Saudi Arabia slashed prices and set plans for a big increase in crude production in April. WTI crude oil traded 30.96%, down at US$ 28.50 per barrel in the international market. Brent crude oil was down 28.61% at US$ 32.32 per barrel.

The fall in global crude oil prices came after the Saudi move to start a price war after Russia balked at making further steep output cuts proposed by OPEC. The output cuts were proposed to stabilise oil markets hit by worries over the global spread of the coronavirus.

Saudi Arabia plans to boost its crude output above 10 million barrels per day (bpd) in April after the current deal to curb production expires at the end of March.

The world's biggest oil exporter is attempting to punish Russia, the world's second-largest producer, for not supporting the production cuts proposed last week by the Organisation of the Petroleum Exporting Countries (OPEC).

It would be interesting to see how this pans out in 2020.

We will keep you updated on all the developments from this space. Stay tuned!

India's Forex Reserves Hit a New All-Time High

India's foreign exchange reserves jumped US$5.4 billion in the week ended February 28 to hit a new all-time high of US$481.5 billion, following a sharp decline in Brent crude prices and decrease in trade from China and other countries in the wake of fear of spread of coronavirus.

Since 20 September 2019, when Finance Minister Nirmala Sitharaman announced a cut in corporate tax rates, the reserves have been rising week-on-week, this was the 23rd consecutive week of rise.

The country's forex reserves have grown by US$53 billion since September 20, when they stood at US$428.5 billion.

The coronavirus outbreak, which poses threat to global economic growth, has resulted in a sharp decline in Brent crude oil prices, currently trading at around US$45.2 per barrel, the lowest since June 2017.

As per the reports, the decline in crude prices following the virus outbreak will help India as it will reduce India's annual import bill.

The fall in global crude prices has played an important role in keeping India's import bill under check and the coronavirus impact on world economy is likely to keep the prices lower.

YES Bank Saga to Make Capital-Raising Tougher for Other Banks

In news from the banking sector, as per a leading financial daily, the unexpected writedown of some bonds issued by crisis-hit Indian lender YES Bank Ltd as part of a state-led rescue is set to raise borrowing costs and make capital-raising tougher for other banks.

Note that the Reserve Bank of India's (RBI) decision to put YES Bank under moratorium led to the biggest ever fall in shares of the private lender on Friday. Two hours into the trading hours, the stock extended its slide to 85%, as it hit a low of Rs 5.55. This was the biggest slide for the stock ever.

RBI said it has superseded the board of YES Bank for a period of 30 days, owing to serious deterioration in the financial position of India's fifth largest private bank.

The RBI expects to arrive at a credible restructuring plan in the next few days.

The RBI action follows the lender's inability to raise funds that would have helped it provide against loan losses. Prashant Kumar, former deputy managing director at State Bank of India (SBI), will be the administrator of Yes Bank.

Depositors will be restricted to a maximum withdrawal of Rs 50,000 even if they have multiple accounts, a government gazette notification said.

RBI will relax the withdrawal limit in the event of medical emergencies, higher education fees or marriage expenses - up to a cap of Rs 5 lakh. Drafts and pay orders issued so far will be paid in full, the reports noted.

Risk-averse market participants also fled the equity markets as cascading effect of the above decision was seen everywhere. Banking indices also witnessed huge selling pressure.

Tanushree Banerjee has offered some facts and insights on Yes Bank in a recent edition of The 5 Minute WrapUp. You can check the same here: Should You Buy Yes Bank or Short SBI?

In an article released today, we take you through the events that led to the crisis at YES Bank in 10 points. You can read the same here: How the YES Bank Collapse Unfolded - 10 Points

Gold Continues Uptrend

Indian gold April futures rallied over 1% on Monday tracking gains in the international market amid coronavirus fears and a plunge in crude oil hammered equities and sent investors scurrying for safe havens.

Spot gold rose 1.5% to US$1,699.2 per ounce, having touched its highest since December 2012 at US$1,702.5 earlier in the session.

Gold gained around 7% last week and this was the biggest weekly gain in gold in the last 11 years.

Speaking of gold, how lucrative has gold been as a long-term investment in India?

The chart below shows the annual returns on gold over the last 15 years...

Gold Has Been a Shining Long-Term Investment

As you can see, barring just two years - 2013 and 2015, gold has delivered positive returns in 13 of the last 15 years.

Here's what Ankit Shah wrote about this in one of the editions of The 5 Minute WrapUp...

• In fact, gold has delivered double-digit gains in 10 of the last 15 years.
  
  During the entire 15-year period, gold has shot up 555% (compounded annual return of 12.1%).
  
  During the same period, the Sensex surged 511% (compounded annual return of 12.0%). If you include dividends, the Sensex returns would be higher than gold by a couple of percentage points.
  
  One must note that the Sensex returns are not representative of the broader market returns. Moreover, gold was a no-brainer. You didn't have to study financial statements, business models and forecast future earnings growth to get a double-digit return on your investment.

Meanwhile, in one of his latest videos, Vijay Bhambwani shares his view on gold and silver prices. He talks about how the bullion prices will move in the short term.

You can check the same here: Will Gold and Silver Prices Fall because of the Coronavirus?

And to know what's moving the Indian stock markets today, check out the most recent share market updates here.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

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