The bear onslaught prolonged mercilessly for the fourth straight session ended at four month closing low amid a sell-off in global stocks. Nifty, Sensex tanks more than 2 percent today, Nifty tanks 172 points to end below 7600 mark at 7568 while on other side Sensex tanks 554 points and settled at 24851 below the 25000 mark. Here is a list of key Five factors behind a crash in Indian market:
China further devalues the Yuan: Chinese market halted trading for the second time in the last four trading sessions. Shanghai Composite Index tanks more than 7 percent today. Shenzhen Composite Index (which tracks stocks on China’s second exchange) dips more than 8%.
PBoC set the midpoint rate at 6.5646 to the dollar prior to market opening, which is 0.5 per cent weaker than the previous fix of 6.5314. China’s Yuan softened to its softest level against the dollar since February 2011.
PBoC (The People’s Bank of China) had devalued yuan by 034% on January 5, 0.2% on January 6, and 0.5% on January 7.
China continues to remain an important part of the global economy but considering the fact that it will remain an important part of the global economy.
Downgrades to outpace upgrades:
Sovereign downgrades are likely to outpace upgrades in 2016, there are 131 sovereigns agency which rates globally, around which 25 had negative outlooks versus eight positive outlooks on 31st Dec 2015 (ratio of 3 to 10).
World Bank slashed growth forecast: The World Bank cut its growth forecast for the global economy. Indian economy to grow at 7.8% in this year i.e. 2016 and China’s to grow at a more modest 6.7%.
The world economy as a whole would grow at 2.9%, which is a modest upturn from the growth of 2.4 % estimated for last year i.e. 2015.
Crude tanks and hits 11-year low: Crude oil dips and hits a fresh 11 year low as the world’s supply glut showed no signs of easing and slowing demand added to the gloom.
Brent crude dropped to its lowest since 2004 to $34.95 a barrel.
However, Global oil prices tanks 70% since mid 2014 as near-record output from major producers such as the OPEC (Organization of the Petroleum Exporting Countries)
Weak handover from Wall Street: US markets dips more a percent to hits three month low on the back of ongoing fresh concerns over the impact of a slowdown in China amid fall in oil prices and rising geopolitical concerns made investors to adopt a risk off mode.
The US Fed Reserve published its minutes from the last policy meeting in Dec in which it showed policymakers decided to raise interest rates last month after almost all of them gained confidence inflation was poised to rise.
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