After a seven months BSE SENSEX crashed 1406.73 points and NIFTY 50 crashed 432.15 points on a single day. In the terms of percentage, SENSEX crashed 3 per cent and NIFTY crashed by 3.14 per cent. This was the biggest fall in 7 months during COVID-19 pandemic. This is being referred to as “Blood Bath in Dalal Street”. The Dalal Street is the address of BSE (Bombay Stock Exchange). The main reason behind the crash is the new much potent strain of COVID-19 discovered in the United Kingdom.
What led to the market crash?
The following reasons led to the market fall:
New Strain of COVID-19
The health officials in the UK discovered a new virus strain of COVID 19. This new strain of corona virus is likely to spread faster as compared to the other strains. Also, this strain is believed to bring in more challenges as the mutation has occurred in the spike protein of the virus. This will change the way by which the virus transmits. As the COVID 19 vaccines such as Oxford, Pfizer and Moderna vaccine target spike protein, the mutation is questioning the efficacy of the COVID 19 vaccine. This affected the shares of bio-pharmaceutical companies that were constantly increasing lately.
About Aviation Sector
Following the discovery of the new virus strain, India and several other countries banned flights from London, United Kingdom. Also, United Kingdom imposed strict border closure. Aviation stocks were put under pressure due to border closure.
Oil Prices crash
The Energy majors were also lagging as the global oil prices dropped by 3 per cent.
About Brexit Trade Deal
The deadline of post-Brexit trade deal is on 31st December 2020. This is adding to the current scenario coincidentally. Britain and EU has still not clinched a Brexit deal.
About Profit Bookings
They are currently at its peak. Profit Bookings in stock markets occur when companies or individuals liquidate their holdings to cash out their profits they have created. Profit bookings are occurring as economic outlook is uncertain, despite signs of improvement due to COVID 19 and its new threats.
United States Stopgap Funding Bill
Issues & uncertainties over Stopgap Funding bill. This bill includes $900 billion COVID-19 relief packages of United States. This is another reason for the crash of the market. The United States congress has passed the bill. However, President Donald Trump has rejected to sign the bill.
Indian Market suffer the worst one-day Indian Market suffer the worst one-day