Why we witnessed something special in the market today! (Fri 13th Mar 2020)

Last Updated on December 29, 2021 at 5:26 pm

What a day today (Fri 13th Mar 2020) turned out to be in the markets! A 10% fall shortly after opening triggered the lower circuit, led to a halt in trading in the NSE and there was a recovery! Sensex recovered 4% intraday! Nifty 3.81%. Here is why we witnessed something special today.

Earlier today we found that we are in the middle of the biggest Sensex Crash but it could be a healthy one for market homogenisation. This is the intraday Sensex movement from 11 to 13th Mar 2020. The opening, closing, highest and lowest prices are shown.

The reason for such a large variation is said to be short covering. This is when trader short a stock -borrow shares and sell it immediately in the hope they can re-buy at a lower price. This could drive down the market if prevalent. When (if) the price falls lower, they would re-purchase at a lower price for profit. This would drip up the price and is possibly why the market bounced back after trading was halted.

The last two days panned out like this

• 12-Mar-20
  • open 34472.5
  • high 34472.5
  • low 32493.1
  • close 32778.14
• 13-Mar-20
  • open 31214.13
  • high 34769.48
  • low 29388.97
  • close 34103.48

On 13th, The variation bet its low and opening or (low-open)/low is -5.8%

This is the 28th biggest variation.

If that does not sound impressive,  try this. The (close-low)/low is 16% on Mar 13th. This is the biggest such variation since 02-01-1991! Even during the 2008 crash, the biggest was 10.6% (27-10-2008) and during the Harshad Mehta Scam, it was 10.2% (16-03-1992).

Today the (high-low)/low = 18.3%. Only one instance was bigger, 18.8% on 17-05-2004.

Finally, the (low-previous close)/previous close = -10.3% today. This is the sixth biggest variation.

We have just witnessed something special today! Once again, interesting times ahead.