The March 2020 market crash that nobody wanted

This post was most recently updated on August 22nd, 2020

The March 2020 market crash that nobody wanted

The Indian stock market had a painful March 2020. 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 12200 odd level to 11300 in last 2 weeks on Feb.

It all started when the Corona virus started spreading around the world. Contrary to everyone’s belief the corona virus turned out to be very dangerous for the countries around the world. The cases in Europe, specially in Italy started sky rocketing in days and leading to total shutdown of the country on 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 in 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 history of Nifty. This seemed like the end of the world! but fortunately this was the bottom of March 2020 market crash.

23 March 2020
23 March 2020

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

Around the world, British PM , Prince Charles, Tom Hanks were among the famous people who got corona virus. The spread of Corona virus and deaths related to it sky rocketed in the month May.

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

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

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

Govt all over the world have announced massive stimulus money to support the economy this is injecting huge amount 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 point 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 as 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 to 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 on history books as one of the fastest crash in history when the market volatility touched all time high of 80+. It seemed like 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 to a deep recession (Read – Will there be a recession in 2020?) It remains to be seen as how stock market reacts to the events in future.

Happy Reading!

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