Business Desk, ETV Bharat: It seems Bears are back in the game as the BSE Sensex is on a downward spiral since last Tuesday. After finishing above the 52,000-level for the first time on February 15 (Monday), the Sensitive Index has lost 2,410 points or 4.62 per cent in the last five trading sessions.
The loss was more acute today as Sensex lost 1,145 points to close below the crucial 50k level and the broad-based NSE Nifty shed 306 points to close at 14,675.
Four Factors Behind the Crash
1. Spike in Covid-19 cases: Markets started to drift lower amid fresh concerns over the increase in the number of COVID-19 cases. Rising number of cases in major states like Maharashtra and Kerala has stoked fears that the economic impact will be much larger than earlier estimates.
As on Sunday, the total number of Covid-19 cases has reached nearly 1.1 crore and the death toll is pegged at 1.56 lakh.
To contain the rising number of cases, the Government of Maharashtra imposed lockdowns in few parts of the State and the Chief Minister Uddhav Thackrey has warned that the lockdown will be extended to the entire state if citizens don’t cooperate.
2. Weak global cues: As per analysts, major western markets failed to provide any support as equity investors show growing concern about rising bond yields which could hurt high-growth companies reliant on easy borrowing.
3. Profit booking: According to market observers, there is a selling pressure in the market as investors await key economic data.
Official estimates say that the economy has entered into a technical recession last year as the GDP shrunk 23.9 per cent and 7.5 per cent in April-June and July-September quarters respectively.
Reports suggest that GDP growth figures, which will be released on Feb 26, is likely to have returned to a positive territory after two consecutive quarters of contraction.
4. Rotational trading: As per brokerages, rotational trading was seen in the market where investors shifted investments from large cap stocks to a number of mid cap and small cap stocks in view of improved earnings outlook.
Since Sensex tracks only large cap stocks, the index must be shedding the numbers.
(With agency inputs)