Impact of Covid-19 Pandemic On Stock Markets

The rapid growth of the unprecedented pandemic has put the world of stock markets in jeopardy and transformed the worldwide business outlook unexpectedly. This article empirically evaluates the impact of the covid-19 pandemic on the stock market.

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Initially, the coronavirus, which led to the pandemic outbreak triggered in the city of Wuhan, in December 2019, spread slowly all over the world. Since then, the world has transformed, changing our economies, our lives, and our business fortunes as well. It can be considered as an unfolding journey that happens to be reflected in the ups and downs of share prices.

Ever since the lockdown, stock markets happen to loom under fear with prevailing uncertainties. The pandemic impact has sent stock markets throughout the world crashing to such levels not witnessed earlier. After a strong correlation with the indices and trends of the Global market, numerous stock markets happened to fall by approximately 40%.

While the stock markets of the world have gone through numerous financial crises during the past, the latest one was the Global recession in 2008. And, the present covid-19 crisis happens to be different from the earlier fallouts.

Responding to the present turmoil in the stock market, the government and the Reserve Bank of India happened to come up with a slew of reforms like regulatory relaxation, reductions of repo rate, and additional measures for boosting liquidity within the system that the pandemic happened to impact. The corporate sector, on the other hand, also seemed to get a major pandemic blow. Subdued loan growth, payment deferrals, sluggish business situations, and increased cases of bad loans happened to surface in the health and development of the economic activity.

Deceleration of demand-supply chain, GDP growth, cutting discretionary expenses has also been observed throughout the lockdown. This ultimately has led to falling in marketing expenses, household incomes, hiring freeze, and reduced travel cost.

Organizations with increasing distribution reach, innovative products, a healthy balance sheet, and technology-driven processes would most probably revive the growth momentum after lockdown. High capital expenditure and lower oil prices by the government can create capital, hence providing a platform to grow post-covid 19.

Other than that, numerous organizations have delayed significant purchases for avoiding projects that happen to be complex and expensive, which sometimes might prove to be disruptive to existing business procedures. Constantly struggling to increase value on a regular basis, organizations and stock market leaders need to take a hold of the situation before the pandemic takes a toll on the entire stock business industry.

Outlook For Stock Markets

As far as the market outlook is concerned, we need to shift back our focus to its history. Drops in Sensex are temporary, and every dip provides investors with opportunities to enter the stock market for earning a higher return, particularly for people with a long-term horizon.

While the Covid-19 pandemic crisis is real and it greatly impacts the economy of the world, historically, these kinds of crisis have not lasted long. It is because the world happens to be competent enough to rise up with answers for combating such challenges.

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With organizational shares tumbling on the impact of the covid-19 pandemic, market leaders need to be concentrated on the business stability and make sure that they preserve the balance sheet and liquidity.