STOCK MARKET DURING COVID-19

            We are in the middle of a pandemic, that has made life come to a standstill across the globe. Every sector is being affected due to this but today I am going to talk about Indian Stock Market. How has the Stock Market fared during Covid-19. Investors sentiment in India is very low ever since cases has started to increase globally and even before the lockdown came into effect. Indian Stock Market has been the worst affected due to this pandemic, eroding almost 26% in dollar terms between February 1 and April 9 as compared to European and US Market which went down 20% and 14% respectively during the same period. What is more interesting is that Chinese Stock Market went down only 3% in the same period.
           Now, coming to the Indian Stock Market. The Stock Market (Sensex) crashed from a high of 42000 in mid-January to just above 25000 on 23rd March. The nationwide lockdown started on 25th March in India whereas the market has already reached its all time low in recent times even before the lockdown. This was particularly due to foreign investors moving from emerging market like India to dollar-backed assets.



           The graph clearly shows how the Indian Stock Market crashed even before the Covid-19 hit our country and show its effect.
           The Stock Market have a history of crashes and it is not not something new. But the good news is whenever market crashes it recovers even faster. Sensex crashed 54% in one year (1992) in "Harshad Mehta Scam" but recover 127% in the next 1.5 years. In 1996, the market went down by 40% during the "Asian Crisis" but recovered 115% in the next year. In 2000, during "Tech Bubble" the market went down 56% in 1.5 years and recovered 138% in the next 2.5 years. In 2008 "Financial Crisis" the stocks went down 61% in one year but again recovered 157% in the next 1.5 years. So we can see that all big falls are followed by big rallies.
          The S&P 500 Indices also have a similar history of crashes being followed by big rallies.

            Recently due to Covid-19, the market went down by almost 30% in one quarter but we can expect a quicker recovery once things start getting settled. And also the current recovery looks faster than the average recovery we had in the past.


No one can expect when the market will recover fully but with an all-out effort from Central Bank and the Government, we can expect it to rebound quickly. 

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