Zee Media Bureau
New Delhi: It was a mayhem and the bloodiest Monday the stock markets have even seen – the BSE Sensex crashed by 1,624 points while the NSE Nifty plunged 490 points wiping out Rs 7 lakh crore from investors' wealth.
While the Finance Ministry Arun Jaitley might have said it was temporary and that along with the RBI Governor Raghuram Rajan, they sought to soothe the frayed nerves and said fundamentals of Indian markets remain strong, the damage has been done for the day.
Here is why the markets fell like they did:
China: China stocks fell by over 8 percent on Monday, sharpest decline since 2007 over fears of a hard landing for the country's economy and it triggered off a wave of fear amongst the global stock markets including India's.
Fears about the sputtering Chinese economy have spread like wildfire in global stocks, leading to a vicious round of risk aversion selling, South China Morning Post said.
Global stocks: On Friday, global stocks had fallen especially the US stock markets. While the Dow Jones industrial average fell by 530.94 points, or 3.12 percent, to 16,459.75, the S&P 500 lost 64.84 points, or 3.19 percent, to 1,970.89. Nasdaq Composite also dropped by 171.45 points, or 3.52 percent, to 4,706.04.
European stocks were almost 3 percent in the red on Monday and Wall Street was braced for similar losses.
Oil prices: For the first time in over 6 years, oil prices fell below the USD 40 per barrel mainly due to weak China manufacturing data. US crude was last down 3.6 percent at just below $39 a barrel while Brent lost 3.7 percent to $43.74 a barrel to take it under January`s lows for the first time.
"It is a China driven macro panic," said Didier Duret, chief investment officer at ABN Amro. "Volatility will persist until we see better data there or strong policy action through forceful monetary easing."
Indian Rupee: The Rupee plunged by 66 paise to fall below the 66 level for the first in over 2 years due to strong demand of the US Dollar from importers and banks. The rupee also dropped even as the dollar weakened against other major global currencies overseas amid mounting global economic slowdown worries.
