Published: 14th February 2022
What the FAQ: Sensex, NIFTY tank — what went wrong with the stock market?
The stock markets, in the US as well as locally here, are facing the brunt of the Russian-Ukrainian crisis
The stock markets this week are off to a not-so-auspicious start. At 3:31 pm on Monday, February 14, the BSE Sensex was trading 1,747 points or 3 per cent lower, at 57,405. Meanwhile, the NIFTY 50 was down 531.95 points or 3.06 per cent, at 16,843. But what has been causing these downward trends in the local markets? Are foreign powers at play here? We unravel all the reasons right here.
What has been the driver behind the markets crashing?
The main origin has been attributed to the US stocks closing sharply lower on Friday, February 11, due to increased worries regarding Russia invading Ukraine in the coming days. This led to oil prices going up and investors feeling jumpy enough to dump risky assets like equities. The ongoing US inflation crisis has also been seen as a driver in the short-term market crisis.
What is to be expected in the coming days?
Experts have warned investors to expect some amount of volatility in the near term with respect to the Indian markets. It would be down to oil prices which decide NIFTY's run in the next few days. If prices per barrel go past $110, then NIFTY might come down to its December 2021 lows, at 16.4k — and it's already dangerously close.
What should investors do about the situation?
As a general rule, one should not have to worry about a market crash if one does not have to sell stocks in the short term. One also does not need to worry if they have emergency money buffered away, apart from stocks, to get through the crisis. This market crash can be weathered if you have strong companies' shares that pay their dividends in the long run.