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Why Sensex Crashed and Lost Huge Points

Vital factors: Why SENSEX crashed and lost huge points? What should you do?

by Holistic Leave a Comment | Filed Under: Stock Market Investment

Why SENSEX has crashed and lost huge points?

SENSEX has been falling from the peak for the last few months. It has dropped around 4000 points. Investors are scared of this economic pressure. The Indian government, economist, and financial experts are trying their best to calm the investors.

But, what is the root cause of this correction?

There are four major elements that have contributed to this market correction.

1. Fall of Rupee value against Dollar
2. The rise in Crude oil price
3. Rising bond yields and
4. Withdrawal of foreign investment

Fall of Rupee value:

[the_ad id=’14106′]
The rupee falling against Dollar is not a new thing, but it hits the record low. Rupee collapsed 13% against the dollar. Dollar value hits Rs. 75 on 10.10.2018 (Wednesday). It is the worst loss in the last 16 years. Not only Rupee, but most of the Asian currencies have lost its value this month.

The price rise of crude oil, the shortage of exporting of gold and oil, and the increase of the bond interest are the major causes of the rupee plunge.

 

Oil Price:

For the last Four years, the price of crude oil has increased from 40 to 75 dollars per barrel. India is the world’s third-biggest oil importer. So, no wonder the price increase of crude oil hitting the Indian economy. It is one of the reasons for foreign investors to dump their shares. It is the impact of the trade war between the US and China. If the situation continues, the price of crude oil may increase up to 90 dollars per barrel in a few months.

Bond yield:

To make the economic pressure worst, RBI raised the yield on the 10-year government bond to 8.22%. According to economists and financial analyst, it added fuel to the problems, and it only increases the count of the financial obstacles.

Foreign Investors:

To make the situation worse, the foreign investors have been selling their shares. They sold their shares worth net of Rs. 17,600 crores in October, in September they sold stocks worth net of Rs. 9, 600 crores. Last year overall foreign investment is Rs. 2 lac crores. Foreign investors are not scared of the price increase of crude oil and fall of rupee value. US bond yields raised. They wanted to make use of that and invested in them. So, they withdrew their Indian stocks. So, there is no wonder it affects the SENSEX.

Other Factors:

The financial experts and economists think, increasing bond yield and other decisions are not enough to calm the investors. Instead of that, it only increases the reasons for economic problems. The retreat of importing Crude from Iraq has been one of the causes of economic dilemmas.

Guide nris

What should you do?

Whether the investor or the expert “what should I do” is the question bugging them. Economist and the government have been trying to control the economic problem. Apart from India, most of the other Asian countries have the same situation. BSE, Nifty, Dow Jones, S&P 500 also heavily lost their stock index points in these few days. There is no point to panic. It won’t make everything better. Doing nothing prevents from making things even worse.

Are these (above-discussed) 4 factors, something new to the stock market?

Haven’t market faced these factors earlier?

Haven’t market performed in the past regardless of these factors?

Let us check the fundamentals.

Indian Economy: Strong fundamentals, improving growth outlook

[su_table responsive=”yes”]

Improving macros FY 13 FY 14 FY 15 FY 16 FY 17 FY 18 FY 19E
GDP at market price (% YoY) 5.5 6.4 7.5 8 7.1 6.7 7.5
Centre’s fiscal deficit (%GDP) 4.8 4.4 4.1 3.9 3.7 3.5 3.5

[/su_table]

  • GST is stabilising. The impact of GST and demonetisation on growth is now behind.
  • Capacity utilisation is improving.
  • GDP is growing at a much higher rate compared to 5 years back. The fiscal deficit is lesser and under control.

Therefore, corporate India is expected to grow. That will eventually reflect in the stock index.

One more worry, you might have is the upcoming elections.

Elections and equity returns Spot the pattern*!

[su_table responsive=”yes”]

Year Ending BSE S&P Sensex 1-year absolute returns
Mar-79 100
Mar-80  129  29
Mar-81  173  35
Mar-82  218  26
Mar-83  212  -3
Mar-84  245  16
Mar-85  354  44
Mar-86  574  62
Mar-87  510  -11
Mar-88  398  -22
Mar-89  714  79
Mar-90  781  9
Mar-91  1168  50
Mar-92  4285  267
Mar-93  2281  -47
Mar-94  3779  66
Mar-95  3261  -14
Mar-96  3367  3
Mar-97  3361  0
Mar-98  3893  16
Mar-99  3740  -4
Mar-00  5001  34
Mar-01  3604  -28
Mar-02  3469  -4
Mar-03  3049  -12
Mar-04  5591  83
Mar-05  6493  16
Mar-06  11280  74
Mar-07  13072  16
Mar-08  15644  20
Mar-09  9709  -38
Mar-10  17528  81
Mar-11  19445  11
Mar-12  17404  -10
Mar-13  18836  8
Mar-14  22386  19
Mar-15  27957  25
Mar-16  25342  -9
Mar-17  29621  17
Mar-18  32969 11

[/su_table]


* Represents year of elections
Source: Sensex: www.bseindia.com, Election Commission of India for election years, Returns computation internal

*As can be noticed there is no pattern in Sensex returns during the year in which elections were held or in years before or after the elections

What should you REALLY do?

“People make bad choices all the time, usually because of fundamental inability to operate over long time frames.” – Charlie Munger

1. Long-term returns matters to us and not each year return. We can’t do anything with market volatility or irregularity. This is how the market works.

“Gains won’t come in a smooth or uninterrupted manner; they never have.” – Warren Buffet

2. Continue your SIP and STP. As the market is available at a discount, it is better to continue our investments. Continuation of SIPs / STPs will help you average out. You will be able to recover from your losses sooner.

“The tendency of people to run when the situation is bad and go in only when it’s good is a good formula for losing money.” – Peter Lynch

3. In this last 10 years, there are many negative events in the stock market, economy, commodity prices, politics, terrorism, natural calamities…Regardless of all these negative events, the stock market has deliver long-term returns. Negative events make temporary headlines. By acting based on that, don’t redeem your investment and make permanent lose. Please avoid noise.
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27. June, 2023.
Mr Ramalingam who is the Director of Holistic investments has a excellent financial planning knowledge, the entire Holistic team has been very helpful in my financial planning journey and execution. This is my third year of financial planning with Holistic investments and so far I am satisfied with the progress I have made.
Binamra Dash
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Very knowledgeable team. Guided me properly with my concerns.
Murugan Bala
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I have been investing through Holistic for the past 4 years and my experience with them have been really good. The team of Rajan and Ramalingam doing excellent services in meeting my needs through proper guidance on investment options customized. Theya re always available on any specific needs time to time.I would recommend their services to my friends and colleagues too.
Neeraja R K
Neeraja R K
15. May, 2023.
Working with holistic investment planners was a really wonderful experience for me. For me the entire team had been very supportive in all ways. Their working strategy is well planned and methodical. They always keep me informed and updated about my investments, so that i can take informed decisions. The team first helps us understand the basics of investments, then they collect data, work with the data and then provide investments solutions according to our goals which i find it the best. Good luck to the entire team.
deepika kulkarni
deepika kulkarni
21. April, 2023.
We have availed holistic service from last couple of years and are very happy with our decision. Their systematic approach has helped us plan our finances and meet our goals. They provide very comprehensive and detail plan and resource management every 6 months which ensures we are on right track to achieve our goals. Rajan and Ramalingam from holistic are always there to help us with our queries. They have also accommodated any changes to our goals or resources mid year in a professional manner.
Ashook Panneerselvam
Ashook Panneerselvam
21. March, 2023.
For the past year, I have been interacting with Holistic Investment. I frequently read Nanayam Vikatan, which is a publication owned by the Vikatan family, and I was impressed by their financial advice. My brother also suggested holistic investing, and he also got excellent financial advice. Holistic Investment follows a methodical approach that I really liked because they first fully understand our financial situation "As Is," which includes "Assets" and "Liabilities," as well as our short-, mid-, and long-term goals, on the basis of which they provide a detailed plan on how to achieve our goals for which they are recommending various investment options. Even in the investment advice, why do they suggest particular mutual funds and what is the justification behind it, which adds transparency to the client. One essential factor is that they are always available. Even if I needed to make some urgent financial decisions, they were very helpful and kind to answer my questions via phone calls, WhatsApp messages, and emails. I was very happy with their service. Periodic reviews are also crucial, even though I have forgotten that they occur once every three months, and I also intend to renew this year.
Mahesh S
Mahesh S
19. February, 2023.
I have availed Holistic investment service for last 1yr against my early retirement decision. they provided me comprehensive detailed report how to move ahead with my existing resources. moreover, they are available to me whenever i have any doubt.. highly recommend others to avail their service
Google rating score: 4.5 of 5,
based on 104 reviews

Google Reviews

Lingesh MMG
Lingesh MMG
20. September, 2023.
Na eppo tha financial goal la enna therunju kitta..enaku full support panna thuku thank you..🥰 friendly nalla pesuninga...
Ravi L
Ravi L
15. August, 2023.
Very knowledgeable and professional team, guided me with the precise financial solutions and timely suggestions.
Hardik Dave
Hardik Dave
5. July, 2023.
Holistic Investment is really nice and trust worthy financial planner. They plan things in realistic manner and also consider future dimensions of items also. They are always available for small or big queries, and also share knowledge and help you become more financial literate, and take right decisions in all financial matters.
Dr. Padmakar Wagh
Dr. Padmakar Wagh
27. June, 2023.
Mr Ramalingam who is the Director of Holistic investments has a excellent financial planning knowledge, the entire Holistic team has been very helpful in my financial planning journey and execution. This is my third year of financial planning with Holistic investments and so far I am satisfied with the progress I have made.
Binamra Dash
Binamra Dash
13. June, 2023.
Very knowledgeable team. Guided me properly with my concerns.
Murugan Bala
Murugan Bala
16. May, 2023.
I have been investing through Holistic for the past 4 years and my experience with them have been really good. The team of Rajan and Ramalingam doing excellent services in meeting my needs through proper guidance on investment options customized. Theya re always available on any specific needs time to time.I would recommend their services to my friends and colleagues too.
Neeraja R K
Neeraja R K
15. May, 2023.
Working with holistic investment planners was a really wonderful experience for me. For me the entire team had been very supportive in all ways. Their working strategy is well planned and methodical. They always keep me informed and updated about my investments, so that i can take informed decisions. The team first helps us understand the basics of investments, then they collect data, work with the data and then provide investments solutions according to our goals which i find it the best. Good luck to the entire team.
deepika kulkarni
deepika kulkarni
21. April, 2023.
We have availed holistic service from last couple of years and are very happy with our decision. Their systematic approach has helped us plan our finances and meet our goals. They provide very comprehensive and detail plan and resource management every 6 months which ensures we are on right track to achieve our goals. Rajan and Ramalingam from holistic are always there to help us with our queries. They have also accommodated any changes to our goals or resources mid year in a professional manner.
Ashook Panneerselvam
Ashook Panneerselvam
21. March, 2023.
For the past year, I have been interacting with Holistic Investment. I frequently read Nanayam Vikatan, which is a publication owned by the Vikatan family, and I was impressed by their financial advice. My brother also suggested holistic investing, and he also got excellent financial advice. Holistic Investment follows a methodical approach that I really liked because they first fully understand our financial situation "As Is," which includes "Assets" and "Liabilities," as well as our short-, mid-, and long-term goals, on the basis of which they provide a detailed plan on how to achieve our goals for which they are recommending various investment options. Even in the investment advice, why do they suggest particular mutual funds and what is the justification behind it, which adds transparency to the client. One essential factor is that they are always available. Even if I needed to make some urgent financial decisions, they were very helpful and kind to answer my questions via phone calls, WhatsApp messages, and emails. I was very happy with their service. Periodic reviews are also crucial, even though I have forgotten that they occur once every three months, and I also intend to renew this year.
Mahesh S
Mahesh S
19. February, 2023.
I have availed Holistic investment service for last 1yr against my early retirement decision. they provided me comprehensive detailed report how to move ahead with my existing resources. moreover, they are available to me whenever i have any doubt.. highly recommend others to avail their service
Google rating score: 4.5 of 5,
based on 104 reviews

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