First, it was Manic Monday, then Freaky Thursday, and now Black Friday the 13th -- the carnage triggered by the coronavirus across global financial markets has continuously weakened the confidence of investors.
Investors' wealth was eroded by Rs 23 lakh crore in the past two trading sessions with Rs 12 lakh crore evaporating on Friday morning alone. S&P BSE Sensex fell 9.43 percent while the broader NSE Nifty 50 crashed 966 points to sit at 8,624 points. Trading was stopped on March 13 for 45 minutes after the Nifty crashed 10 percent in the morning. It was after 12 years since 2008 that the share-trading was halted by a market-wide circuit breaker system.
This circuit breaker system gets triggered at three stages of the index movement, at 10 percent, 15 percent and 20 percent. When triggered it brings about a coordinated trading halt in all equity and equity derivative markets nationwide to stop a freefall or massive surge in an index during trading hours. It is triggered by the movement of either of the two indexes whichever is breached earlier. The duration of the halt depends on the time of the breach and the quantum of fall. These breakers help to protect investors and brokers from a sudden surprise and losing a massive chunk of their capital.
During the tech meltdown of 2000-02 and the 2008 global financial crisis, the 30-50 percent drop in markets happened over two years, but in 2020 it has taken just a month.
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