Monday Market Mayhem after Circuit Breaker Friday

On Monday, 16 March 2020, India’s benchmark stock index SENSEX witnessed its second-worst drop of 2,713 points. This Monday market mayhem can be attributed to the unexpected move of the US Federal Reserve to cut interest rates to2008-09 Financial Crisis level of 0 – 0.25%.

Crux of the Matter

SENSEX Showdown

1. 9 March 2020 – SENSEX drops 1,942 points after the US Federal Reserve announced an interest rate cut. It records the worst drop in history.

2. 12 March 2020 – SENSEX drops 2,919 points amidst virus scare, oil price drop, and Yes Bank crisis. It records the worst drop in history, beating the previous worst drop recorded just 4 days ago.

3. 13 March 2020 – The first half-hour of trading sees a 3,000 point drop in SENSEX. A circuit breaker triggers and trading on the market halts for 45 minutes. The index recovers nearly 5,000 points and ends nearly 1,300 points higher.

4. 16 March 2020 – SENSEX records its second-worst drop in history with a 2,713 point drop. It reacts to the tumbling global markets after the US Federal Reserve made an unexpected interest rate cut. RBI mulls over banning the trade of Derivatives.

Complete Coverage: Worst Sensex Fall In The Shadow Of Yes Bank And Global Market Meltdown

#GlobalFinancialCrisis2 Global Markets seem apprehensive of the dawning Global Financial Crisis as the Coronavirus outbreak has put brakes on trade & commerce. UK’s FTSE 100 index recorded its second-worst fall on Thursday. France and Germany lost 12% and 14% respectively. Coronavirus-hit Italy recorded its worst drop of 17%. Dow Jones also lost 2,352 points to end at 21,200 on Thursday. To improve the market situation, the US Federal Reserve announced that it will inject $1.5 trillion in the economy to boost liquidity. It observed that the Coronavirus panic is causing the public and companies to stock up more liquid funds like cash, and thus there is a selling spree in the market. In reaction to the Federal Reserve’s ailment package of $1.5 tn, global markets improved a little on fabulous Friday. However, on Monday, 16 March 2020, the Federal Reserve announced an emergency interest cut of 100 basis points or 1% to stay ahead of the downward spiraling market. This has brought the interest rate level at 0 – 0.25%, a rate observed last during the 2008-09 Global Financial Crisis.

Complete Coverage: Coronavirus

Curiopedia

What are Circuit Breakers? A financial regulatory mechanism, Circuit Breakers are a halt on trading on the stock exchange that is used when people are panic-selling. At a certain predefined percentage fall, the exchange automatically halts trading. On March 9, 2020, US benchmark index Dow Jones fell more than 7%. Circuit Breakers were triggered and trading was halted. On 13 March 2020, India’s benchmark index SENSEX fell more than 10%, triggering a halt. The trading halt lasted for 45 minutes. More Info

Curated Coverage

1. Business Standard – MARKET WRAP: Sell-off resumes; Nifty ends at 3-yr low; Sensex at 30-mth low

2. Hindustan Times – Sensex cracks over 2,000 points, Nifty below 9,400 amid coronavirus worry

3. Business Standard – Sebi considers short selling ban, trading curbs to reduce market volatility

4. Livemint – The plumbing behind world’s financial markets is creaking over coronavirus panic

5. Hindustan Times – Sensex, Nifty close up after circuit break

6. CNN – NY Fed vows to pump in $1.5 trillion to fight coronavirus-linked ‘highly unusual disruptions’ on Wall Street

7. CNN – Federal Reserve cuts rates to zero to support the economy during the coronavirus pandemic

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