Factors Responsible for the Market Crash
Thursday morning started with plunged Sensex by 1000 points in the early trade, and it was just a little reminder to all stock market investors that this small world is full with twists and turns in global economies and financial markets, which are both, sadly interconnected. Now, even the mutual fund investors, who are ideally in a safer zone, have begun wondering what happened overnight that haunted the stocks so bad around the world.
Well, to satiate our investors’ curiosity, we are here with one more informative write-up, which will offer you the details of all the factors which are responsible for the dip.
Factors Leading to Jolt in the Markets Globally
- Swinging US Bond Yields
There was a sharp drop in the US stocks overnight, and this was one of the major reasons responsible for wiping off Rs 4 lakh crore of the domestic investors on the D-street. Atlanta Federal Reserve revised its economic growth with a hike of 4.2 percent in the September quarter. During the last policy review, the Fed signalled one more hike by the year-end and three by 2019. These data points showing strong US growth outlook have affected the US bond yields to go up. That is why investors are nervous fearing the rising borrowing cost which is bound to hurt corporate bottom lines in the months ahead. - Topsy-Turvy in the Currency Markets
With the rising bond yields, the buying pressure on the dollar is also renewed. This, in turn, has created havoc amongst the other currencies in emerging and developed markets. The rise in yields is sucking funds out of emerging markets, thus causing pressure on them. The Chinese Yuan has already taken a big knock, and even the rupee is down by around 16 percent for the year. - Heavy Sell-offs by FIIs
There was a sustainable outflow of funds by foreign institutional investors (FIIs), and this is yet another reason for continued pressure on the domestic equity market. Also, due to deteriorating macro factors and increasing tensions due to the global trade war, FPI is reducing its exposure to India from the past few months. - Weak Global Cues
There was a heavy loss in the US market which led Dow Jones Industrial Average index to crack 831 points, which is its worst loss in eight months. This has greatly affected the investors’ sentiments, leaving them in fear that the rising interest rates and trade tensions could hurt company profits. This ramped up their selling of high-flying technology and Internet stocks
Shanghai shares too dropped to their lowest since late 2014, whereas China’s Bluechip slid by 3 percent.
Experts’ Take
If you are investing in SIP, then there is no need to fear such uncertainties. Timing the market is practically impossible, and therefore we suggest our investors to make the most of this dip by making an additional purchase and reviewing portfolio in the guidance of experts. The right investment in the period when the market is down can help you fulfill your long-term goals. So, this can be a great time to invest in the schemes that suit your objectives best. For more guidance on this, contact our experts at MySIPonline.
You can even share your query through the form mentioned below and get an answer to it.
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| Mirae Asset Large & Midcap Fund - Regular Plan - Growth Option | 1.35% | 18.56% | 39.12% | 18.19% | 24.5% | Invest |