March 2020 could go on to be the most disastrous month in stock market history.
The Sensex opened at 38,910 on March 2nd 2020 and crashed to 25,981 on March 23rd 2020. That’s 12,929 points lost in less than a month.
In between the market has witnessed brutal crashes. 3935 points (13.15%) was lost in just one day on March 23.
Top 10 Sensex Crashes in India
|1||Mar 23, 2020||3934 points|
|2||Mar 12, 2020||2919 points|
|3||Mar 16, 2020||2713 points|
|4||Mar 09, 2020||1941 points|
|5||Mar 18, 2020||1709 points|
|6||Aug 24, 2015||1625 points|
|7||Feb 28, 2020||1448 points|
|8||Jan 21, 2008||1408 points|
|9||Oct 24, 2008||1071 points|
|10||Mar 17, 2008||951 points|
- The Top 5 belongs to March 2020, such has been the brutality of the fall.
- Except for one big crash in August 2015, the list is dominated by 2020 and 2008.
- While 2008 was a financial crisis, 2020 is a health crisis which could lead to a major financial crisis.
- Even in the financial crisis of 2008, the market did not fall in a straight line. It would fall, rise and then fall further.
- The 2008 crash was staggered and spread out over a period of one year between January 2008 and February 2009.
- The 2020 crash could either be short, or go on for an equally long period of time (or longer), but the speed of the 2008 fall wasn’t as swift and as unexpected as 2020.
- Comparisons are now being made between 2020 and the Great Depression of 1929.
- If the spread of the Coronavirus continues to gain momentum, the entire world could be in lockdown for an extended period of time.
- Such lockdowns could lead to job losses and extreme economic slowdown which could last several years.
- The Great Depression of 1929 lasted an entire decade until 1939.
- Unemployment rate was at 27% at the depth of the depression in 1933.
- The market does not like uncertainty, and hence it’s factoring-in the worst. There are too many questions around COVID19 and very few answers.
- When will the lock down end? When will people be able to get out of their homes and lead normal lives? This question has no answers currently, which is why the market is reacting the way it has over the last couple of months.
- A quick solution to the Corona issue could see the market rebound quickly.
- But if the lockdown continues for more than a month, things could get very serious. Jobs will be lost. Only the biggest and strongest companies will survive. The markets could take a very long time to recover.
Is there any positivity at all in situations like this? There is.
The market has gone to 2014 levels at the time of writing this article. Investors who have money to invest for the next 5-10 years, can wait for the market to consolidate (get less volatile) and begin investing.
If the world is still under the Corona threat a few years from now, we are all doomed. But that’s highly unlikely. Life and business should soon get back to normal and when it does, the market won’t just follow but lead!
In a few years from now, we will look back at this time as once-in-a-lifetime opportunity when many companies were available at throwaway prices. The question is – how many people have guts to buy?
Most people who bought into the initial correction – thinking this is going to be yet another small correction – are already out of cash and in huge losses too.
The market is tough. It will test you, it will depress you and shock you too. Only the toughest will eventually survive and thrive.