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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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Jey S
Jey S
24. September, 2021.
I have been using Holistic Investment Planners for the last three years. Mr. Srinivasavaradhan answered all my questions and doubts very patiently during the first free consultation. I was able to clearly define my short-, medium- and long-term goals once I signed up for the comprehensive plan and got their investment plan suggestion to achieve my goals. They are very polite and highly professional whenever I contact them for any queries or make investments. They never pressurize you to invest on their recommended financial products. I would have been lost money by investing directly without their help since I do not have time and knowledge about different financial products. Risk planning is also done as part of financial planning. Truly, they are holistic planners when it comes to your financial planning. They help you to define your life goals, understand your financial resources and establish a plan to invest towards reaching those goals. They do review your plan as you progress to make sure that you are on correct path to achieve those goals. Kudos to the team and keep up the good work!!! I am happy that I found holistic investment planners for my financial planning and management.
aksaswadkar
aksaswadkar
24. September, 2021.
I was about to retire and really not understanding how to invest money to have financial freedom and fulfilling my goals. Was desperately searching on internet way out and fortunately came across Holistic Investment Planners. I read number of articles on their website and realized that this is the agency which I want and engaged their services for my retirement planning. It is an excellent experience to be associated with Holistic. Right from day one our interaction was fantastic and they gave me such a wonderful plan that I had never imagined. I am fortunate enough to be in the client list of Holistic. I have recommended Holistic to my friends as well.
Lionel Faber
Lionel Faber
16. September, 2021.
I've been availing their services for the past year. They are highly knowledgeable in the field and are very patient with all doubts and queries. Personalized financial planning is provided keeping your short term, medium term and long term goals in mind. They do not pressurize you to purchase schemes of their choice. They provide their input and suggestions and leave the decision up to you which shows their honesty and high principle.
Sridhar
Sridhar
8. September, 2021.
Financial planning brings peace in life. Holistic Investment have supported in arriving financial plan based on future goals. My investments are regular since then. They are professionals in their business, will recommend others.
Nitesh Agrawal
Nitesh Agrawal
6. September, 2021.
I have been using Holistic Investment Planners from last one year. The journey has been fantastic. Being a finance person myself I always thought we can look after and plan own finances also. However, due to lack of time and deciplain the things are not always as desired. After joining with Holistic Investment for the first time Icame to know the Financial goals and quantified them. Some dreams were unrealistic based on the earnings and savings so had a reality check. Also got the information and deciplain of investing on regular and more rewarding securities. I definetly suggest to use Holistic Investment Planners. They are professionals, available and hear youor full story before presenting plans. They are flexile in the sense if there are some urgent deviations required, they help to plan the same. For all professionals/individuals I would suggest using professional help of Holistic Investment Planners for best results in long term investment and financial goals achivements. Last advise will be to start early in your life. It really pays well to start in the beginning itself else the dreams needs to adjust :)
Swetha Vasanth
Swetha Vasanth
6. September, 2021.
This is my first year service with the Holistic Team and I would say that they are very much helpful in creating a financial plan and follow ups during the year. I would definitely suggest them if anyone who is willing to proceed with their savings professionally.
Joseph Mathias
Joseph Mathias
6. September, 2021.
I came to know about Holistic Investment Planners online while searching for different investment ideas. Once I contacted them the journey was very smooth. Mr. Ramalingam explained all the aspects of Financial planning in detail and it opened my mind. I realized how important it is to have a Financial planning. Mr. Rajan suggested all the requirements as per my goals and made a Investment plan keeping in mind of my goals. I started my Investment journey with them. I wish I had done it some years back then it would have been in a different level. Review meetings were held every six month to check the implementation of the plan and check the results as per the requirements and to check if any changes required. Overall it was a good experience with Holistic Investment team and would like to continue in the years to come.
Srinvas Kannan
Srinvas Kannan
30. July, 2021.
I came across Holistic investment planners almost 5-6 years back, but I did not have the trust since I had met a few of them who did not sound promising. Then I started investing through a financial advisor of my friend. After 4 years of investing the returns were very low. I was disappointed and started looking for financial advisors when I came across Holistic investment. I had a detailed discussion about my goals and the way they would approach achieving my goal before deciding to switch my investments to them. After a thorough analysis of my then existing portfolios, they suggested new ones and we zeroed-in on 6 schemes/funds where our investment would be split. I am glad I made the decision of switching over and taking Holistic planner's advise, my returns are handsome and I only wish I could have taken their help/advise 5 years back itself. Neverthless, I would like to recommend their services for investment and financial advise if someone is serious about their investments.
Shivaram Andiappan Selvaraj
Shivaram Andiappan Selvaraj
3. July, 2021.
I got a free first time consultation. I got my doubts resolved. They also gave additional advises for investment planning which was also useful.
Nellai B
Nellai B
26. June, 2021.
I have been associated with them for the past three years. They are very professional and polite in answering all our questions. I have complete trust in their suggestions. I strongly recommend for anyone. I am looking forward to have strong and successful association with them.
Google rating score: 4.4 of 5,
based on 61 reviews

Google Reviews

Jey S
Jey S
24. September, 2021.
I have been using Holistic Investment Planners for the last three years. Mr. Srinivasavaradhan answered all my questions and doubts very patiently during the first free consultation. I was able to clearly define my short-, medium- and long-term goals once I signed up for the comprehensive plan and got their investment plan suggestion to achieve my goals. They are very polite and highly professional whenever I contact them for any queries or make investments. They never pressurize you to invest on their recommended financial products. I would have been lost money by investing directly without their help since I do not have time and knowledge about different financial products. Risk planning is also done as part of financial planning. Truly, they are holistic planners when it comes to your financial planning. They help you to define your life goals, understand your financial resources and establish a plan to invest towards reaching those goals. They do review your plan as you progress to make sure that you are on correct path to achieve those goals. Kudos to the team and keep up the good work!!! I am happy that I found holistic investment planners for my financial planning and management.
aksaswadkar
aksaswadkar
24. September, 2021.
I was about to retire and really not understanding how to invest money to have financial freedom and fulfilling my goals. Was desperately searching on internet way out and fortunately came across Holistic Investment Planners. I read number of articles on their website and realized that this is the agency which I want and engaged their services for my retirement planning. It is an excellent experience to be associated with Holistic. Right from day one our interaction was fantastic and they gave me such a wonderful plan that I had never imagined. I am fortunate enough to be in the client list of Holistic. I have recommended Holistic to my friends as well.
Lionel Faber
Lionel Faber
16. September, 2021.
I've been availing their services for the past year. They are highly knowledgeable in the field and are very patient with all doubts and queries. Personalized financial planning is provided keeping your short term, medium term and long term goals in mind. They do not pressurize you to purchase schemes of their choice. They provide their input and suggestions and leave the decision up to you which shows their honesty and high principle.
Sridhar
Sridhar
8. September, 2021.
Financial planning brings peace in life. Holistic Investment have supported in arriving financial plan based on future goals. My investments are regular since then. They are professionals in their business, will recommend others.
Nitesh Agrawal
Nitesh Agrawal
6. September, 2021.
I have been using Holistic Investment Planners from last one year. The journey has been fantastic. Being a finance person myself I always thought we can look after and plan own finances also. However, due to lack of time and deciplain the things are not always as desired. After joining with Holistic Investment for the first time Icame to know the Financial goals and quantified them. Some dreams were unrealistic based on the earnings and savings so had a reality check. Also got the information and deciplain of investing on regular and more rewarding securities. I definetly suggest to use Holistic Investment Planners. They are professionals, available and hear youor full story before presenting plans. They are flexile in the sense if there are some urgent deviations required, they help to plan the same. For all professionals/individuals I would suggest using professional help of Holistic Investment Planners for best results in long term investment and financial goals achivements. Last advise will be to start early in your life. It really pays well to start in the beginning itself else the dreams needs to adjust :)
Swetha Vasanth
Swetha Vasanth
6. September, 2021.
This is my first year service with the Holistic Team and I would say that they are very much helpful in creating a financial plan and follow ups during the year. I would definitely suggest them if anyone who is willing to proceed with their savings professionally.
Joseph Mathias
Joseph Mathias
6. September, 2021.
I came to know about Holistic Investment Planners online while searching for different investment ideas. Once I contacted them the journey was very smooth. Mr. Ramalingam explained all the aspects of Financial planning in detail and it opened my mind. I realized how important it is to have a Financial planning. Mr. Rajan suggested all the requirements as per my goals and made a Investment plan keeping in mind of my goals. I started my Investment journey with them. I wish I had done it some years back then it would have been in a different level. Review meetings were held every six month to check the implementation of the plan and check the results as per the requirements and to check if any changes required. Overall it was a good experience with Holistic Investment team and would like to continue in the years to come.
Srinvas Kannan
Srinvas Kannan
30. July, 2021.
I came across Holistic investment planners almost 5-6 years back, but I did not have the trust since I had met a few of them who did not sound promising. Then I started investing through a financial advisor of my friend. After 4 years of investing the returns were very low. I was disappointed and started looking for financial advisors when I came across Holistic investment. I had a detailed discussion about my goals and the way they would approach achieving my goal before deciding to switch my investments to them. After a thorough analysis of my then existing portfolios, they suggested new ones and we zeroed-in on 6 schemes/funds where our investment would be split. I am glad I made the decision of switching over and taking Holistic planner's advise, my returns are handsome and I only wish I could have taken their help/advise 5 years back itself. Neverthless, I would like to recommend their services for investment and financial advise if someone is serious about their investments.
Shivaram Andiappan Selvaraj
Shivaram Andiappan Selvaraj
3. July, 2021.
I got a free first time consultation. I got my doubts resolved. They also gave additional advises for investment planning which was also useful.
Nellai B
Nellai B
26. June, 2021.
I have been associated with them for the past three years. They are very professional and polite in answering all our questions. I have complete trust in their suggestions. I strongly recommend for anyone. I am looking forward to have strong and successful association with them.
Google rating score: 4.4 of 5,
based on 61 reviews

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