Mumbai: Today market fell more then 450 points, here are some reasons why market seen falling.
Fears over global trade have risen after reports suggested that new CoronaVirus in China, the world’s second largest economy, has killed 80 people and infected more than 2,700 people with over 450 people in critical condition. The disease was originated in Chinese city, Wuhan.
Reports also said the virus has been detected in other Asian countries and other parts of world including France, United States, Australia etc.
Hence, China extended the week-long Lunar New Year holiday by three days to February 2, saying schools would return from their break later than usual. Chinese-ruled Hong Kong said it would ban entry to people who have visited Hubei province in the past 14 days.
Market participants kept a wary eye on developments around the virus, which the World Health Organization (WHO) last week deemed “an emergency in China,” but not, as yet, for the rest of the world.
Correction in Global Markets
Global equity markets traded sharply lower as investors looked worried about the fast-spreading coronavirus on China and other several economies, with Japan’s Nikkei dropped 2 percent.
European markets were also under pressure with France’s CAC, Germany’s DAX and Britain’s FTSE falling 2 percent each.
Markets in Australia, China, Hong Kong, Singapore, South Korea and Taiwan were closed for trade on account of public holidays.
Metals Under Pressure
Metals stocks witnessed sharp selling pressure with the Nifty Metal index falling more than 3 percent as investors worried about the impact of fast-spreading coronavirus on Chinese economy, the biggest consumer of metals.
Jindal Steel, SAIL, Vedanta, Tata Steel, JSW Steel, NMDC, Hindustan Copper, Hindustan Zinc and Hindalco were down 3-6 percent.
Caution Ahead of Union Budget
The market continued to be cautious from last week, ahead of Union Budget to be presented on February 1 and the volatility also increased significantly.
The Union Budget 2020 is majorly important this time, considering the current economic slowdown that brought down the GDP to 5 percent, more than six year low. Hence, there are lot of expectations that the government could be considering several measures to boost consumption and bring economy back on track, even after measures announced last year including cut in corporate tax rate.
The Nifty50 fell from the word-go and extended selling pressure as the day progressed, forming bearish candle on daily charts after bearish engulfing pattern last week.
Hence, experts feel 12,100 could remain crucial level to watch out for and if it breaks, then the index can fall below 12,000 levels.
“Bears dominated the session throughout however, broader markets were not as bad. As earlier mentioned 12,100 zone remains crucial for the bulls to hold as a decisive breach below the support zone would provide fresh momentum on the downside and in that event, index can test 11,800 support zone on the downside. Currently Nifty is in a range between 12,100-12,450 zone,” Amit Shah, Technical Research Analyst at Indiabulls Ventures told Moneycontrol.