COVID-19, YES Bank crisis, oil prices crash send Sensex tumbling

Amid the severity of coronavirus going pandemic, the massive plunge in global crude oil prices and the crisis at India’s fifth largest private lender YES Bank,  investors on D-Street have lost more than Rs 6.50 lakh crore in value as both benchmark market equities plunged over six per cent.

The BSE Sensex index plummeted as much as 2,366.26 points to hit 35,210.36 during the session while, the NSE Nifty index crashed to as low as 10,327.05, down 662.4 points from the previous close.

Here are the key factors dragging Dalal Street.

Oil price crash

Oil prices crashed by over 30 per cent after Saudi Arabia launched an aggressive price war against onetime ally Russia, sending rattled stock markets plunging.  Following Saudi Arabia’s decision to cut prices and raise production after the talks with OPEC+ countries fell out, big energy groups in India, too, were under acute pressure with the shares of Reliance Industries and ONGC slumping by upto 12 per cent.

Coronavirus scare deepens

Investors panicked over the rising number of COVID-19 cases that have increased to 43 as four new cases emerged from Kerala, Delhi, Uttar Pradesh, and Jammu. The number of people infected by the virus topped 1,07,000 across the world as the outbreak reached more countries.

 The economic fallout could include a total of $2.7 trillion in lost output. S&P Global ratings warned that the coronavirus outbreak could wipe $211 billion off Asia Pacific economies this year.

YES Bank crisis

Adding to the woes of investors, the Yes Bank crisis has raised concerns over the stability of the country’s banking system despite the fact that the bank’s shares picked up after SBI stepped in to buy 49% of stake in the company along with a consortium of other investors. 

Though equities were sold down heavily, deepening a sell-off that began two weeks ago in response to fears the coronavirus epidemic will hit global economic growth, Wisdom Capital, however, expresses optimism about the market outlook in the long term given India’s strong fundamentals, low interest rate environment and the sharp drop in crude oil prices.