Before the Adani Group’s shares recovered from the fall, the news of the bankruptcy of Silicon Valley Bank and Signature Bank in the US has sent a thunderbolt to the Indian stock markets.
Investors have lost Rs 7.3 lakh crore in the last 3 trading days alone. The BSE Sensex plunged 2,100 points in three days. The bankruptcy of Silicon Valley Bank has affected the international stock markets.
At the end of today’s (March 13) trading hours, Indian banks were said to be operating under tight control by the RBI. Bank stocks fell sharply. The Sensex closed down 897 points and the benchmark Nifty closed below 17,200 points. All sector stocks ended lower
Experts have listed 5 reasons for the stock market crash. They are
1. Silicon Valley Banking Crisis:
Even as the US government took immediate action, the bankruptcy of Silicon Valley and Signature Bank sent stock markets reeling. In a global economy, any news, positive or negative, has an impact on others. India cannot stay away from it. A huge contagion effect will affect our market as well.
2. Collapse of International Stock Markets:
Asian stock markets follow the trend of US stocks. Last week the Dow Jones lost 4.4 percent, the S&P 500 lost 4.5 percent, the Nasdaq lost 4.7 percent and Japan’s Nikkei lost 1.1 percent. Britain’s FTSE 100 saw a two-month low of 2.4 percent.
3. Increase in sale of bank shares :
Today alone, the Nifty Bank index saw a decline of 2.3 percent. At the maximum, Indusnt Bank saw a decline of 7 percent. Public sector bank stocks fell 5 percent. While risk is low in terms of banking structure, depending on the particular institution, start-up, limited banks may be vulnerable, creating confusion among investors and bank customers.
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4. Fear of interest rate hike :
While the prospect of a 50 basis point rate hike by the US Federal Reserve has diminished following the SVP crisis, investors are looking ahead to February consumer inflation. Inflation in February was higher than expected, if at all. Interest rates may rise. At the same time, amid the banking crisis, tension remains with the central bank to stabilize economic activity. Raising interest rates may lead to further recession.
5. Technical Factors :
The Nifty has seen a slight recovery from the slump over the past several weeks. But with today’s headline news, it has gone to the bear. “Now, as long as the Nifty remains below 17,250 points, there is a high chance of a slide between 17,000 and 16,800 points. Perhaps, if we see a rise, it will go between 17,350 and 17,442 points.
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