Impact of COVID19 on Capital
Markets - is it an opportunity to
invest or to remain cautious?
SANTHOSH M (19MBA0011), PRITHIVIRAJ G (19MBA0094),
SIVANESAN M (19MBA0002), VISHMITHA K (19MBA0103),
PAVITHRA V (19MBA0003), MOHANA PRIYA MA (19MBA0005)
VIT Business School, VIT UNIVERSITY, VELLORE, TN. 632014
ABSTRACT
No previous infectious disease outbreak has impacted the stock market as
powerfully as the COVID-19 pandemic. Equity markets have corrected 25-35
percent from their peak levels due to many reasons which also include the
outbreak of COVID-19. There has also been a notable correction in crude oil
prices failure of communication between Opec and non-Opec producers. Market
capitalization of more than 27 companies in BSE500 index has fallen below
Rs.20,000 crores due to the COVID-19 outbreak. According to reports the corona
virus pandemic has been more volatile than the global financial crisis of 2008.
The price earnings ratio of Sensex is less than 18 which is which is less than the
historical range of 20-24. In the financial year 2020, the mid-cap index fell by 26
percent while the Sensex fell by 22 percent. The central theme of the paper is to
analyse the state of capital market and crude oil prices during the Covid-19
pandemic and what is the suggested opinion on investing in the capital market at
this time. To conclude, many investors are panic selling which has pushed the
capital market to new lows, therefore if we are wishing to invest, it is better
advisable to invest in stock market if we are interested in holding for a long period
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of time or go for a buy low sell high approach as we all know by the previous
similar pandemics like the 2008 financial crisis, the market tends to reward those
who invest in this period of time in the correct stocks.
1. Financial market analysis for the year 2020:
1.1 January and February 2020
The Indian stock market was on its winning streak in December and
January with around 1.5% advancement in Nifty 50 and 0.7% S&P BSE Sensex
benchmark indices. But the benchmark didn’t last long as it fell down by 2.7%
and 3.1% respectively during the second fortnight of January 2020 due to the
union budget which followed on to February.
Figure 1. Source: [Link]
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The Nifty 50 faced a 2.5% loss on a single day on February 1, 2020 and
the S&P BSE Sensex being no exception fell down by 2.4% as well. This was not
only evident in the major indices but also the CMIE overall share price index
which also declined by 2.2%. Aggregate market cap was also eroded by 2% on
February 1,2020. This was all due to the union budget not scaling up government
expenditure adequately which made the investors react. However, the market
managed to overcome the budget blues in the upcoming trading days i.e. February
3 and 4. The rupee value also hovered around 71 per USD mark.
Crude oil prices were still rising in January 2020 touching the USD 70 per
barrel mark since May 2019. This was the result of the US and China trade war
and the problems surrounding the OPEC + countries. This is where the COVID-
19 first shows its influence in the economic activities where the Crude oil prices
entered a free fall state fearing the demand taking a hit due to the coronavirus
outbreak in China. The price of Crude oil fell 12 USD from Jan 6 to Jan 31
touching its lowest since October 2019. On the other hand, gold prices
skyrocketed and grew greatly due to the coronavirus.
1.2 March 2020:
Indian stock market was still going downwards into the red for the second
consecutive month in February 2020. Nifty 50 saw a decline by 6.4% during the
month after falling by 1.7% in the previous month which makes it the steepest
monthly fall witnessed for the last 17 months. Due to the Union budget, the Nifty
50 dropped from 12,355 on Jan 16 to 11,662 on Feb 1. Due to the coronavirus
spreading rapidly, foreign investors (FPI) have panicked and the Nifty 50
declined to 11,202 by the end of Feb 2020.
The S&P BSE Sensex showed no exception and also fell by 1.2% in
January 202 and another 6% in February 2020. The CMIE Overall Share Price
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Index also fell down by 6.2% in February 2020. 101 government companies lost
11.4% in February 2020 and 2,150 private companies lost 5.4%. The mid-caps
fell down by 9-10% and the small-caps fell down even steeper falling around 11-
13%.
CMIE transport services index declined by 8.3% in February 2020 and the
CMIE tourism industry index crashed by 15.9% on fears of the coronavirus and
the fears of business getting hit by cautious travel advisories issued by many
countries. On the other hand of positivity, CMIE hotels and restaurants industry
index gained 8% during February 2020. Indian Railway Catering and Tourism
corporation yielded a massive return of 44.8% during the month.
Figure 2.
Source: [Link]
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Price to earnings (P/E) multiple of the Nifty 50 fell from 28.3 times in
December 2019 to 25.5 times in February 2020 and the S&P BSE Sensex also
shrank from 26 times to 23.2 times. Popular broking houses believed that the
market will improve once the spread of coronavirus is arrested and the economy
starts showing signs of revival. The returns are anticipated to be around 14-15%
till December 2020.
Foreign Portfolio investors sold equities worth USD 1.8 billion and debt
worth USD 1.3 billion. The withdrawals from equity in February 2020 in net basis
amounted to USD 197 million and from debt USD 14 million. The FPI continued
to pull out USD 785 million from the Indian capital market during the first four
days of March 2020 (USD 469 million worth equity and USD 294 million worth
debt instruments). Mutual funds pumped in another 3.9 billion in February 2020
and invested USD 1.8 million in Indian debt instruments in February 2020. These
were the lowest monthly investments since July 2018.
The Indian rupee also changed from 71.5 per USD to 72.2 per USD. In
march it reached the hight of 73.6 per USD due to risk of coronavirus cases
increasing worldwide. This was not the case with Euro and British pound because
they decreased comparing to previous prices.
Oil prices was still under a free fall state where they declined from 67.1
USD per barrel on December 31, 2019 to 58 USD per barrel on January 31,2020
and fell further to 51.2 per barrel at the end of February 2020. Gold prices
however touched a 7-year high of USD 1,672 per troy ounce as of February 2020
as it was the major investment interest due to the coronavirus impact. The gold
prices were 2.3% higher than the preceding month and almost 21% higher than a
year ago. This was the case as of the data analysed till the end of March 2020 and
summarising and comparing them with the previous months and previous years
as this was the month the coronavirus showed a huge impact on the capital market
and the economy.
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1.3 April 2020:
Figure 3.
Source: [Link]
March 2020 was an unbelievable nightmare for the Indian equity markets.
Coronavirus induced panic selling among the investors causing a huge 23%
deduction in the market cap of companies listed on the National Stock Exchange
(NSE) within just one month.
The Nifty 50 that started its southward excursion from 12,201 on February
12, 2020, declined to 10,458 by March 11, 2020. On March 12, 2020, the World
Health Organization (WHO) reported Covid-19 flare-up a pandemic, after which
the Nifty 50 drooped 8.3 percent. This was the biggest misfortune Nifty 50 had
endured in a solitary day since the Global Liquidity Crisis of 2008. On March 23,
2020, the Nifty 50 endured one more sharp fall, of 13 percent following PM
Modi's declaration of a 21-day across the country lockdown to capture the spread
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of Covid-19. The fall was not just more extreme than the previous one saw on
March 12, but at the same time was the steepest fall endured by the Nifty 50 since
July 1999.
The BSE S&P Sensex also showed nearly the same loss of 23% of its value
during March 2020. Despite seeing a 23% fall in market cap, the volumes traded
in the Nifty 50 increased from Rs. 8 trillion in February 2020 to Rs. 10.1 trillion
in March 2020, similarly the BSE S&P Sensex saw a massive increase from Rs.
157.7 billion to Rs.463.4 billion in the same period.
After the March 2020 crash the valuations of Nifty 50 and S&P BSE
Sensex look increasingly practical. The P/E various of Nifty 50 remained at 19.4
occasions and that of S&P BSE Sensex remained at 17.8 occasions on March 31,
2020.
CMIE Overall Share Price Index (COSPI), which is a more extensive
market marker including more than 2,000 effectively exchanged scrips, likewise
declined by 23 percent during March 2020. The fall was wide based, with every
one of the 10 deciles of scrips by showcase top announcing twofold digit
misfortunes during the month.
Despite the fact that March 2020 auction was seen no matter how you look
at it, it was progressively fierce if there should arise an occurrence of enterprises
that are hit the hardest by the Covid-19 pandemic and the ensuing lockdown. The
CMIE lodgings and the travel industry administrations industry list, involving 36
effectively exchanged scrips, lost 43.5 percent during March 2020, trailed by
CMIE land industry record which lost 41.3 percent. The CMIE resource financing
administrations record, the CMIE banking file, the CMIE metals industry list, the
CMIE car and ancillaries list and the CMIE materials list detailed a fall in the
scope of 30 to 35 percent. Indeed, even power, mining and food item
organizations, which have been absolved from the lockdown, couldn't get away
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from the unrest. The CMIE beautifiers, toiletries, cleansers and cleansers industry
record, nonetheless, posted 1.1 percent gain in March 2020.
FPI continued to pull out another USD 15.2 billion from the Indian capital
market in March 2020 which was their biggest sell off since January 1999. During
a similar scenario during the fiscal year 2008-09, FPI only pulled out USD 9.9
billion.
FPIs turned to persevering selling from mid-February 2020 as rising
instances of Covid-19 fanned apprehensions of the worldwide economy slipping
into downturn. In March 2020, they sold Indian values worth USD 7.9 billion and
left from obligation instruments worth USD 7.8 billion.
Mutual funds in India saw a less expensive purchasing opportunity in the
midst of this disorder. They made net acquisition of Indian values worth USD 3.8
billion in March 2020. These were their most noteworthy month to month buys
over the most recent one year. Mutual Funds stayed net speculators in the red
instruments during the principal fortnight of March 2020. They began booking
benefits from there on fully expecting a rate cut by the RBI. During the whole
month of March 2020, they made net deals of Indian obligation instruments worth
USD 1.6 billion.
Indian rupee deteriorated by 4.2 percent against the US Dollar in March
2020, surrendering to feeble market suppositions brought about by Covid-19
pandemic. The household cash unit began debilitating against the greenback since
the third seven day stretch of February 2020. From Rs.71.59 per USD on
February 20, 2020, it debilitated to Rs.72.19 per USD by February 28, 2020. The
rupee proceeded with its southward excursion, devaluing to Rs.75.39 per USD on
the most recent day of March 2020. The rupee devalued against the Euro as well,
from Rs.78.07 per Euro in February 2020 to Rs.82.34 per Euro in March 2020.
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Be that as it may, it revealed a gentle thankfulness against the Sterling Pound and
the Japanese Yen in March 2020.
Gold costs that were moving northwards for past numerous months,
dropped from USD 1,683.7 per troy ounce on March 6, 2020 to USD 1,474.4 per
troy ounce by March 19, 2020. The fall in gold costs was as opposed to the
prevalent view that financial specialists dump less secure resources in the hours
of vulnerability or emergency and park their cash in gold which is considered as
the most secure resource. However, this time, gold costs fell alongside other
resource classes as speculators hurried to raise money in the midst of elevated
frenzy in monetary markets over the Covid-19 pandemic, as indicated by media
reports. Financial specialists began checking out the yellow metal by and by in
the last 50% of March 2020 which pulled the costs back to USD 1,609 for every
troy ounce by March 31, 2020. For the long stretch of March 2020, gold costs
found the middle value of at USD 1,591.9 per troy ounce, a smidgen lower than
their February 2020 normal of Rs.1,597.1 per troy ounce.
Raw petroleum costs descended tumbling in March 2020. Indian crate of
unrefined petroleum was esteemed at USD 22 for each barrel on March 31, 2020,
much lower than its estimation of USD 51.2 per barrel toward the finish of
February 2020. Oil costs had begun relaxing from around USD 67 for every barrel
toward the start of January 2020 on fears of a flexibly excess. In March 2020, the
interest fallen totally the same number of nations around the world turned to
lockdowns to capture the spread of Covid-19. What exacerbated the situation was
that OPEC pushed up its yield by 90,000 barrels for each day (bpd) to 27.93
million barrels for every day (mbpd) in March, following breakdown of its
creation cut settlement with Russia. Oil inventories in the US flooded by 13.8
million barrels in the week finished March 27, 2020 to 469.2 million barrels, as
indicated by the US Energy Information Administration (EIA).
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1.4 May 2020:
Figure 4.
Source: [Link]
The Indian financial exchange pared a large portion of the misfortunes it
acquired in March 2020 before the finish of April 2020. The Nifty 50 progressed
by 14.7 percent subsequent to losing 23.2 percent in March 2020. BSE S&P
Sensex likewise rose by 14.4 percent, in the wake of shedding 23.1 percent of its
incentive in March 2020. The CMIE Overall Share Price Index (COSPI), which
houses more than 2,000 effectively exchanged scrips, painted a comparable
picture. The COSPI rose by 13.8 percent in April 2020, as against a fall of 23
percent in the first month.
Markets took a positive prompt from news drifted by US president Donald
Trump that enemy of jungle fever medicate hydroxychloroquine is a likely
solution for Covid-19. Upon the US presidents' request the Indian government re-
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opened fares of hydroxychloroquine to a couple of nations on April 7, 2020. The
move did some incredible things for the value advertise, which increased more
than seven percent on a solitary day. Markets figured out how to continue the
increases, yet additionally progressed further in the accompanying three weeks
as positive news for the business continued streaming in spite of an ascent in
Covid-19 cases. The administration allowed ventures in green and orange zones
to begin activities from April 20, 2020 and gave its gesture for working of
neighbourhood and independent shops from April 25, 2020.
Mid-tops and little tops posted more than 20 percent returns in April 2020.
Additions for their bigger partners, be that as it may, were restricted in the scope
of 13 to 15 percent.
The market recuperated in April no matter how you look at it. Top gainer
businesses were drugs and pharmaceutical, oil-based commodities, vehicle and
metals whose stocks yielded 20-30 percent returns during the month. The slow
pokes were transport administrations, power, hardware and pearls and
adornments scrips which posted single-digit returns. Supplies of most different
businesses detailed twofold digit gains in April.
Market valuations improved. P/E products of Nifty 50 and S&P BSE
Sensex, which had as of late fallen underneath 20 without precedent for a long
time, crossed the imprint again in April 2020. The P/E numerous of COSPI
expanded to 36.8 occasions in April 2020 from 31.9 occasions in March 2020.
Foreign portfolio investors (FPIs) kept on hauling cash out of the Indian
capital market in April 2020. They made net deals of USD 2 billion in April, in
the wake of having dumped values and obligation worth USD 15.2 billion in
March. FPI selling has been activated by the Covid-19 emergency, which incited
speculators to come back to place of refuge resources like gold and dollar-named
protections.
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In April 2020, FPIs made net deals of government and corporate securities
worth USD 1.7 billion. They began losing enthusiasm for obligation instruments
since November 2019. During November 2019-February 2020, they sold
obligation worth USD 2.8 billion. In March 2020, their deals topped at USD 7.8
billion. Furthermore, in April 2020, they kept on evading government and
corporate securities. They, in any case, put USD 523 million in the red trade
exchanged funds through the wilful maintenance course (VVR) in April 2020.
FPIs left from Indian values worth USD 904 million in April 2020. This
was the third month straight where FPIs were net venders of value. In February
2020, they had sold values worth USD 198 million and in March 2020, the deals
had topped USD 7.9 billion.
Mutual funds normally will in general slurp up values modest when the
FPIs disregard them. In any case, in April 2020, they too sold values worth USD
725 million. Likewise, they left from obligation worth UDS 25 million.
The Indian rupee depreciated further in April 2020. The domestic currency
edged near Rs.77 per US dollar on two instances in April. During the month, it
averaged at Rs.76.2 per US dollar. It has lost 6.2 per cent of its value against the
US dollar in the last two months. The Indian rupee devalued against the British
pound by two percent and against the Euro by 5.7 percent over the most recent
two months.
Brent crude oil cost, after about splitting among January and March 2020,
plunged to a two-decade low of USD 18.7 per barrel in April 2020. The Indian
container of crude oil arrived at the midpoint of just a smidgen higher at USD
20.5 per barrel during the month. Gold costs continued their northward walk in
April, in the wake of balancing out in March 2020. They spiked by as much as
8.3 percent in the initial 14 days of the month, riding on the yellow metal's
sheltered paradise request. Costs drifted around the USD 1,700 for each troy
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ounce mark in the second fortnight of April 2020. On a normal, a troy ounce of
gold got USD 1,683 in April 2020, which was its most noteworthy valuation over
the most recent seven years. These are the data which has been collected and
analysed regarding the Indian Financial market and economy which includes
crude oil prices and gold (yellow metal) beginning year 2020 and up until May
2020.
2. Critical Evaluation of capital market
Figure5.
Source:[Link]
000000&repnum=24242&frequency=M&colno=1
From the above table we can see that in February 2020, funds raised from
equity has decreased significantly due to the COVID-19 outbreak and when
people were afraid to invest in the capital market, But soon we can see that the
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people have realized that investing now is the right and profitable time if they are
planning to hold on to the securities, that is why in March 2020 the funds raised
from equity has risen again.
The market is always dynamic but one thing people understood that if they
invest in the time when other investors and shareholders are panic selling, that
means the securities will yield great results in the future.
Figure 6.
Source:[Link]
21011011000&repnum=22797&frequency=M&colno=1
From the overall CMIE share price index we can see that the Index market
capitalization has dropped to 112,836,928 in March 2020 which is the lowest it
has been since a very long time. This is proof that all the sectors in the market
were struggling and that induced the panic selling attitude among the investors,
leading to a huge loss in rate of capitalization and an extreme increase in trading
volumes (10,706,004).
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Figure 7.
Source: [Link]
Financial sector is one the biggest hit sector in the secondary capital
market with index market capitalisation reaching 28,201,391 which is the lowest
it has been since March 2017. All the sectors were affected but the Covid-19
affected the financial sector the most.
From the below table (NSE trading details) we can notice that the market
capitalisation has fallen down by a significant percentage and there has been a
significant increase in trade volumes and numbers. This shows us that the
investors have started to panic sell and some investors have finally decided to let
go of the stocks they have been holding on.
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Figure 8.
Source: [Link]
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3. Future of Investments
Figure 9.
Source:[Link]
0510214146120&nvpc=035000000000&nvtype=ANALYSIS+%26+OUTLOOK&oporder=1
Capital formation is predicted to be hit the hardest by Covid-19 pandemic
induced lockdown. Analysts state that Gross Fixed Capital Formation (GFCF)
will contract by 22.2% during the year 2020 – 21.
A fall in real GFCF isn't completely strange in India. It has fallen in 10 of
the 60 times since 1960-61. The steepest fall was of 5.6 percent in 1970-71. The
constriction this year, be that as it may, is relied upon to be complex greater. This
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tremendous fall in GFCF likewise comes after the last seventy five percent of
2019-20 having seen compression in GFCF.
The lockdown hits GFCF in three different ways. To start with, it quickly
brought development and plant erection exercises to a crushing end during the
lockdown. Second, it has made work and crude material deficiencies with broken
gracefully chains that makes the resumption of work after an unwinding or lifting
of the lockdown exceptionally troublesome. Third, it will prompt reassessment of
all capex spending by organizations and governments.
These constraints are expected to result in a steep 55% y-o-y contraction
of real GFCF in May 2020 and another 2.5% shrinkage in June 2020. Going on
this basis, the quarter of April-June 2020 is expected to end with a 57.5%
contraction in GFCF. Demand constraints, along with continued labour shortages
due to unemployment are expected to dent GFCF by 18 percent in the September
2020 quarter. Work related issues are relied upon to get settled generally by
October-November. Be that as it may, feeble interest will keep on gouging GFCF
by eight percent in the December 2020 quarter and by four percent in the March
2020 quarter. Accordingly, GFCF will shrink by 22.2 percent in 2020-21. We
expect capital formation in the private corporate sector to fall by 30 percent in
2020-21.
There are three huge supporters of GFCF in India. Private ventures
contribute 37 percent to it, government, nearby bodies and open segment
endeavours (PSUs) contribute 24 percent, while the parity 39 percent originates
from family units and non-benefit establishments serving families (NPISH) such
a gurdwaras and sanctuaries.
It is improbable that ventures would return at any point in the near future.
For this, family unit salaries must be fixed, purchaser assessments must be re-
established, limit usage of enterprises must ascent and business certainty must be
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revamped. There are an excessive number of achievements to be met before we
can anticipate that speculations should ricochet back.
4. Impact of crude oil price falls in India
Consequently, there has been a 24% fall in crude oil prices. India will also
benefit majorly from the correction in crude oil prices. India imports around $115
billion value of crude oil annually. Even a small correction of 1% in crude oil
prices saves India $1.2 billion annually.
The BSE has introduced trading in negative prices for crude oil. BSE has
made changes to its trading platform to accommodate negative prices of crude
oil. This came in weeks after crude oil prices dropped to a negative $37.63 per
barrel. The simulation of the revised pricing mechanism started from May 4,
2020. The Brent crude futures offered by BSE can be traded in negative if the
benchmark falls to such prices. BSE quoted “To facilitate testing of this feature
in the simulation (test) environment, the trading price range of Brent Crude Oil
futures contracts shall be suitably updated to accept orders at negative price levels
and execute trades”
5. Inferences and analysis given by analysts and investors
In India, we also witnessed YES Bank being put under a moratorium and
being taken over fortunately by the government and RBI to prevent negative
fallout of the situation.
All the global markets including Dow Jones (USA) have seen a decline in
global equity markets. Nifty (INDIA) has seen a %decline of -26.89% from
comparing data from 31-Jan-2020 and 20-Mar-2020. Nifty Midcap 100 (INDIA)
has also seen a drastic %decline of -29.70%. S&P and BSE Index experienced
a hit of over 20%. The foreign exchange reserves also saw a decline of
$6.5billion. Nifty declined nearly 23 percent on a year-to-date basis till April 27
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with IndusInd Bank dropping the most at73 percent. Half of the Nifty 50 stocks,
financials not included, are trading at a single digit valuation as Indian equity
markets are nearly 1/3 (one-third) off record-high levels they scaled in January.
Commodity, metal and oil stocks are trading at single digit 12-month forward
price to earnings ratio due to slumping metal prices and lower oil and gas prices.
while stocks including Nestle, Bharti Airtel, HUL and Asian paints are seeing an
increase in the 12-month forward price to earnings ratio than the 10-year average
for the respected stocks. Among the 19sector sub- indexes compiled by BSE, a
gauge of health-care stocks has advanced 14% this year as the drug makers have
moved into the spotlight amid the pandemic.
The Indian equity market declined nearly 6% on May 4 th (Monday).
Nifty Index went down by 5.74 percent. Indian Overseas investors have
withdrawn over Rs. 10,000 crores from domestic capital markets in April so far.
They also took out a record Rs.1.1 lakh crores in March on a net basis from both
equity and debt markets. This was mostly caused due to the COVID-19 outbreak.
Investors have been adding more money in the market during the bad phase
because of one main reason and that is historical perspective. In similar
historical market crisis such as Asian financial crisis (1997) and Global financial
crisis (2008),even though there was market correction even more drastic (-33%
in Asian Financial Crisis and -61% in Global Financial Crisis) the returns which
followed in a short span of 6 to 12 Months where the investors during the trough
(crisis) were very huge and went up to 109%. Relying on this historical data
might not be the best of idea because markets never give returns in a linear
fashion. Investors are willing to put in more money in the market during the
COVID-19 is because they believe it will give similar returns as like the similar
previous financial crises.
Researches has shown that if the virus is contained within a maximum of
3 months, we can expect Normalisation of Earnings (NoE) in the Financial
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Year 2021. It is also said that the crude oil global meltdown is not going to help
India gain economic growth because it is just a reflection of the poor
fundamentals of the global demand situation but will help India save a couple
billion dollars. Firms with high net cash on their balance sheet will be in a better
position to overcome this situation. Also, firms with a history of superior capital
allocation practices (higher RoCE), consistently high growth capex and high cash
generation capabilities will have added advantage when the situation eases.
Investors are also advised to invest in debt-free companies and avoid companies
which have a direct impact of COVID-19 or a pause is helpful for an average
investor if they are not ready for long-term goals.
Stock markets reward patient long-term investors. There’s no better way
pf making money other than owning a great bunch of Indian companies and
ignoring the inevitable ups and downs of the market. Owning stocks for a long-
term is a sure shot way to success. There were drops in markets due to panics
such as swine flu but also saw a huge return after the situation eased.
6. Recovery from Covid-19
India is expected to have a V shaped recovery post Covid-19 and the
turnaround is expected to be faster than some other economies. The reason why
it is expected to have a “V” shaped recovery is because this is not a natural
disaster situation such as a flood, cyclone or an earthquake and no capital has
been destroyed and the labour force is ready to work once the lockdown is lifted.
This means that India has a better chance than most of the other countries. This
is only possible if the we adopt the right policies to achieve this V- Shaped
Recovery. By the right policy, we actually mean measures that can help SMEs
(Small and Medium Enterprises).This is one of the many things that needs to be
implemented along with appropriate structural reforms, governance reforms and
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the financial sector reforms. As we can see, India’s recovery from the 2008
financial crisis was manifold faster than the other countries. India is also expected
to grow at 1.9% during the current year against about 5% in the last fiscal year
and this is no consolation.
7. Conclusion
This Covid-19 pandemic has induced panic in the capital market which has
forced the market to enter into new lows, but considering previous similar
occasions, the market is likely to pummel back to normal in a short span on 6
months to 1 year and might yield superior returns to investors who are willing to
invest in the stock market. Therefore, it is advisable to invest in the stock market
if planning to hold for a long period or go for a buy low sell high approach because
the market usually tends to bounce back up after similar pandemics such as the
2008 financial crisis.
References:
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