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Old 13th March 2020, 09:46   #1
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Default Effects of Coronavirus on the economy

Sensex crashed by 2,919 points, the largest single day fall, due to coronavirus.

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The S&P BSE Sensex fell 2,919.26 points (8.18 per cent), its biggest one-day fall in absolute terms, to settle at 32,778.14. During the intraday trade, the 30-share benchmark slipped as much as 3,204.30 points (8.98 per cent) to 32,493.10. From hitting a high of 42,273 on January 20, the Sensex is now down by over 23 per cent, in the bear phase.

The benchmark equity indices on the BSE and National Stock Exchange (NSE) witnessed their single-day fall in absolute terms after they settled over 8 per cent lower on Thursday, tracking a fall in the global markets. In percentage terms, it was their second-biggest one-day fall in history.

All the Sensex stocks ended in the negative zone on Thursday. Among the biggest contributors to the 30-share index’s fall were HDFC twins – comprising of HDFC Bank (down 8.18 per cent) and Housing Development Finance Corporation (down 7.88 per cent). Along with these two were oil-to-telecom behemoth Reliance Industries (RIL) (down 7.95 per cent) and ICICI Bank (down 8.68 per cent).
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Old 13th March 2020, 09:53   #2
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Default re: Effects of Coronavirus on the global economy

Was just watching the bloodbath from the sidelines, because US markets fell yesterday and similar action was expected here today.

Coronavirus is certainly the major factor - but the situation looks grim because we have major economic factors as well such as the fall of YES bank.

The next big recession is upon us? Perhaps!
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Old 13th March 2020, 10:19   #3
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Default re: Effects of Coronavirus on the global economy

Already dropped another 3500 points by 10:10am today.

With all businesses freezing activity or new deals, there is no light at the end of tunnel.

If we just have a big recession, we will be very lucky. Until some stability returns, either in form of effective vaccine or .... something else, it is going to get worse.

Society as we know may break down, if humans can't overcome this virus.
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Old 13th March 2020, 10:27   #4
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Default re: Effects of Coronavirus on the global economy

I see every good stock is hitting the low. If someone is looking on long term investment,
IMO, it's the time do some shopping!
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Old 13th March 2020, 10:42   #5
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Default re: Effects of Coronavirus on the global economy

I haven't seen such a sharp recovery in the index after hitting a lower circuit in India. At the moment, the index is down by just 2% which is great recovery after hitting circuits!

On the virus front, agree with Samurai. We NEED to overcome & outpower this virus, else it can be really really grievous situation for societies.

Last edited by saket77 : 13th March 2020 at 10:45.
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Old 13th March 2020, 10:47   #6
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Default re: Effects of Coronavirus on the global economy

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Originally Posted by saket77 View Post
I haven't seen such a sharp recovery in the index after hitting a lower circuit in India. At the moment, the index is down by just 1.5% which is great recovery after hitting circuits!

Strange to see a sharp recovery when trade opened after hitting lower circuit. I think government is supporting it by investing through its organizations like LIC.
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Old 13th March 2020, 10:51   #7
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Default re: Effects of Coronavirus on the global economy

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Originally Posted by saket77 View Post
I haven't seen such a sharp recovery in the index after hitting a lower circuit in India. At the moment, the index is down by just 2% which is great recovery after hitting circuits!
Forced buying by LIC and EPFO?
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Old 13th March 2020, 11:03   #8
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Default re: Effects of Coronavirus on the global economy

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Forced buying by LIC and EPFO?
No official word on it as yet, but I do think that it is forced buying by LIC/ EPFO and other DIIs. I don't think this buying would be coming from FIIs.
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Old 13th March 2020, 11:15   #9
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Default re: Effects of Coronavirus on the global economy

Artificially propping up the stock by forced buying is temporary band-aid. Once the market realizes that nothing has changed in the situation that caused the original decline, it will resume declining.
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Old 13th March 2020, 11:39   #10
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Default re: Effects of Coronavirus on the global economy

The Coronavirus is going to give a body-blow to the economy, not just in India, but globally. I have never seen such a situation where flights are running empty, there is no one in restaurants / malls / cinemas, foreigners are barred from entering India etc. People are shit scared and no one is in a mood to spend any money. I haven't gone out in a week. Retail spending - which is so important to the economy - will suffer serious damage. This is the last thing that India needed. 2019 was sluggish, and now this pandemic. Completely destroys sentiment (of businesses & customers).

If you have savings, consider yourself lucky (especially if you are an entrepreneur). The usual advice would be to curb big spending, but that's not relevant here as no one is travelling abroad or buying a Gucci bag today. If you were considering buying a new car, I would tell you to postpone the decision and use your existing car for now. Hold on to your liquid money.

The car industry has been hit so hard that it's probably losing consciousness. Sales fell in 2019. BS6 in April 2020 is going to lead to price hikes. And now, the coronavirus. People have more important things to think about than buying a new car right now.

Last edited by GTO : 13th March 2020 at 11:41.
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Old 13th March 2020, 11:52   #11
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Default re: Effects of Coronavirus on the global economy

This crash highlights the extreme short nearsightedness of the stock markets and therefore why public distributed (anonymous) shareholder's interest may not really be in the best interest of the society.

If the cause of steep drop is Coronovirus, then it is laughable right now, because the fatalities are not so high (with the current information). The business will definitely take a dip next quarter because of all the restrictions in social interactions and quarantines being practiced by the societies (not because of deaths).
What about later?

So are the stock markets expecting that human society will cease to exist because of this coronovirus spread? And no one is going interact with each other / buy goods and services once the paranoia dies down?

Last edited by alpha1 : 13th March 2020 at 11:55.
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Old 13th March 2020, 11:57   #12
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This might also be an opportunity to shop for some blue chip funds which are at a 52 week low. Companies with strong fundamentals will bounce back from this.
PS: That said, invest only what you are ready to lose.

Last edited by ValarMorghulis : 13th March 2020 at 12:00.
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Old 13th March 2020, 12:02   #13
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Default re: Effects of Coronavirus on the global economy

Whatever gains were made in the last few years have been erased. A lot of people who started investing in mutual funds when savings bank account interest rates were reduced. This crash is going to erode whatever hopes were there for the economy to revive this year. Coronavirus triggered a sell off, but the fundamentals have been weak for a long time. Not 1 consumption driven company did well in the last couple of quarters. The fake euphoria surrounding the Indian econony has ended and a lot of pain is yet to come.
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Old 13th March 2020, 12:17   #14
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Default re: Effects of Coronavirus on the global economy

Yeah, markets tend to pencil in the worst case scenarios whenever there is a crisis like this. In addition to that, there is leverage in the markets. When stocks start to fall, brokers sell the pledged shares to recover the loan given to their customers.

However, experienced stock market investors usually just grin and bear it. Because they would have seen all this before:

Effects of Coronavirus on the economy-img20200313wa0054.jpg

This crash barely manages to get into top 10 biggest downmoves.

Last edited by SmartCat : 13th March 2020 at 12:40.
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Old 13th March 2020, 13:04   #15
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Default re: Effects of Coronavirus on the global economy

Once the virus scare subsides, India can become a preferred market for the foreign investors. Recovery may take some time, but staying invested can help
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