5 Reasons Why Sensex Plunged 740 Points Today

European stock markets too inched lower as investors swapped energy and retail stocks with shares of companies seen as safer during heightened economic uncertainty following a new round of coronavirus restrictions in the eurozone.

Rising Dollar: The dollar hit a fresh four-month high to the euro today amid worries about Europe's third COVID-19 wave and potential US tax hikes.

FII Outflows: Foreign institutional investors (FIIs) were net sellers in the capital market on Wednesday as they offloaded shares worth Rs 19.5 billion.

Profit Booking: Apart from the above, losses were also seen as the share market succumbed to profit-booking.

Most of the profit-booking was seen in the auto and telecom sector today with stocks such as Maruti Suzuki and Bharti Airtel dragging the benchmark index lower.

In news from the commodity space, gold prices for the latest contract on MCX are trading down by 0.3% at Rs 44,730 per 10 grams.

Domestic gold and silver prices struggled today amid mixed global cues. Surging coronavirus cases and a dip in US bond yields supported the safe-haven appeal of gold while a stronger US dollar weighed on the precious metal.

Among gold ETFs, UTI Gold ETF and Invesco India Gold ETF were among the top gainers today.

Note that gold prices have fallen as much as 20% from the recent highs. Prices have fallen from a high of Rs 56,191 in August 2020 to a low of Rs 44,150 in the first week of March 2021.

That said, let us look at how lucrative has gold been as a long-term investment in India.

The chart below shows the annual returns on gold over the last 15 years...

As you can see, barring just two years - 2013 and 2015, gold has delivered positive returns in 13 of the last 15 years.

Even with the recent volatility in prices, gold remains one of the best-performing commodities this year to combat the fallout from the coronavirus pandemic.

View single page >> |

Disclosure: Equitymaster Agora Research Private Limited (Research Analyst) bearing Registration No. INH000000537 (hereinafter referred as 'Equitymaster') is an independent equity research ...

How did you like this article? Let us know so we can better customize your reading experience.


Leave a comment to automatically be entered into our contest to win a free Echo Show.