The March 2020 Market Crash That Nobody Wanted

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The Indian stock market had a painful March 2020 Market Crash. The index fell sharply from 11300 odd levels to all the down of 7610 that’s 3700 – approx 35% drop in a single calendar month. This is on top of Nifty falling from the top of the 12200 odd level to 11300 in the last 2 weeks on Feb.

It all started when the Coronavirus started spreading around the world. Contrary to everyone’s belief the coronavirus turned out to be very dangerous for the countries around the world. The cases in Europe, especially in Italy started skyrocketing in days and leading to a total shutdown of the country on the 9th of March. The virus spread across like what was seen in the movie of Contagion .

Between 11th March and 23rd March Nifty Fell from 10500 to 7600, That’s a 3000-point fall in 2 weeks! If you were on a 2 weeks vacation and turned on your screen then you would be thinking if you are in your dreams!

Nifty March 2020 Market Crash

Nifty 50 March 2020 performance

Nifty March 2020

Nifty Had its worst day on 23rd March 2020, Nifty fell 1110 points in a single day! This is the biggest % fall in the history of Nifty. This seemed like the end of the world! but fortunately, this was the bottom of the March 2020 market crash.

23 March 2020
23 March 2020

India followed suit on lockdown and announced a nationwide lockdown for 21 days from 25th March 2020. Although the number of cases was not really significant in India the Indian Govt was proactive to initiate the lock which helped India to contain its COVID-19 low compared to other countries.

Around the world, British PM, Prince Charles, and Tom Hanks were among the famous people who got coronavirus. The spread of Coronavirus and deaths related to it skyrocketed in the month of May.

The US which was underplaying the virus under the leadership of President Donald Trump is the worst hit because of the virus the cases reached the 500k Mark in just a few weeks and deaths related to the virus have reached a staggering 30k!

It was a panic situation for all the stock markets around the world the Dow Jones also made a low of around 18000 from a top of around 30000- That’s a 40% drop!

There is a growing correlation between this fall to the 2008 market crash(Read What happened in the 2008 stock market crash?). Although there is a good pullback from the lows of 7600 to 9200 levels in Mid-April.  Market analysts think that this is a temporary pullback and market eventually will go to much lower levels from this!

Govt all over the world have announced massive stimulus money to support the economy which is injecting huge amounts of money into stock markets; It remains to be seen how long this rally will last.

The Indian govt too announced various steps to tackle the emergency situation. RBI announced a rate cut of 75 basis points to reduce the interest rate.

There is an interesting comparison by CNBCTV18.com  on what happened during the previous recessions. we don’t know whether we will have the same pattern repeated this time but it’s worth a look at what happened in previous recessions.

Market behavior in recession
Market behavior in recession

Considering the whole world is in shutdown for over a month the world economy has come to a grinding halt. There is very little trade happening around the world. The impact on the industries will be seen in Q1 and Q2 numbers for FY20-21.

Regardless of what happens in the future; The current March 2020 market crash will go into history books as one of the fastest crashes in history when the market volatility touched an all-time high of 80+. It seemed like the world is going to end tomorrow.

But as they say – Be greedy when others are fearful – so were you greedy in this fall?

The world is definitely entering a deep recession. It remains to be seen how the stock market reacts to the events in the future.

Consider Reading – Will there be a recession in 2020?

Happy Reading!

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