Reasons For Share Market Crash-

 

Reasons for share market crash-

 

Experts say that there were 8 main reasons behind the stock market crash today:

1.      Weakness in global markets

2.      Soaring US 10-year bond yields

3.      Rising COVID-19 cases

4.      Heavy profit-booking

5.      Frantic selling

6.      Crashing banking stocks

7.      Fear of FIIs pulling out

8.      Speculation that GDP figures to be announced today by India might not point to an economic recovery.

 

Some Points explained  by market expert-

 

Asian stocks skidded to one-month lows on Friday after an overnight slump in  Wall Street's main indexes after a steep rise in benchmark US Treasury yields.

In a sign the gloomy mood will reverberate across markets, European and US stock futures were a sea of red. Eurostoxx 50 futures lost 1.7 percent while futures for Germany's DAX and those for London's FTSE dropped 1.3 percent each, a Reuters report said.

MSCI's broadest index of Asia-Pacific shares outside Japan slid more than 3 percent to a one-month low, its steepest one-day percentage loss since May 2020.

For the week the index is down more than 5 percent, its worst weekly showing since March last year when the corona-virus pandemic had sparked fears of a global recession.

 

Rising bond yields

A surge in global bond yields spooked investors and triggered distressed selling in other assets. Yields on the US Treasury note vaulted to their highest since the outbreak of corona-virus pandemic on expectations of a strong economic expansion and related inflation.

Bond yields are also rising in other countries as well, including Japan, Australia and India.

"The rising bond yields in the US have spooked investors sentiments which have led to a sell-off in global markets. Moreover, the geopolitical tensions between US and Iran have also weighed on sentiments," said Ajit Mishra, VP - Research, Religare Broking.

 

US-Iran tensions

Investors' sentiment dampened on rising geopolitical tensions between the US and Iran. US President Joe Biden on Thursday directed US military airstrikes in eastern Syria against facilities belonging to what the Pentagon said were Iran-backed militia, in a calibrated response to recent rocket attacks against US targets in Iraq.

The strikes, which were first reported by Reuters, appeared to be limited in scope, potentially lowering the risk of escalation.

 

India's GDP 

Investors remained cautious ahead of the release of gross domestic product (GDP) growth estimates for the third quarter of fiscal 2021 later today by the National Statistical Office (NSO).

A CNBC-TV18 poll estimates growth at 0.6 percent versus negative 7.5 percent on a sequential basis.

Rising COVID-19 cases

India recorded its single-day increase in corona-virus cases above 16,000 for the second consecutive day as the infection tally rose to 1,10,63,491, while the recoveries have surged to 1,07,50,680, according to data updated by the Union Health Ministry on Friday.

A total of 16,577 infections were reported in a day, while the death toll increased to 1,56,825 with 120 new fatalities. The number of active cases increased to 1,55,986, which accounts for 1.41 percent of the total infections, the data stated.