INTERNATIONAL JOURNAL OF INFORMATION TECHNOLOGY - Vol. 23 Issue 18, Nov 2020
Pages: 1-11
Date of Publication: 03-Nov-2021
Print Article
Download XML Download PDF
Impact of Covid-19 on India’s Stock Market
Author: Aman Jindal, Dr. Rajeev Prashar, Dr. Bhupinder P S Chahal
Category: Research
Abstract:
The global outbreak of COVID-19 has severely impacted the financial markets because of lockdown and decreasing demand in the whole world. The fall in the price of crude oil has further deteriorated the economic scenario. There are more than 30000 people affected in India and nearly 1200 people have died because of coronavirus. This research paper presents the impact of COVID-19 on the India’s stock market. There are two major stock exchanges in India i.e. Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). For the present research, top 20 companies from NSE have been selected. The impact was measured by observing change in share price of these companies over last three months period since the pandemic has erupted.
Keywords: COVID-19, Bombay Stock Exchange, National Stock Exchange, Stock market, Share price
DOI: http://doi.org/10.36295/ASRO.2020.23205
DOI URL: http://doi.org/10.36295/ASRO.2020.23205
Full Text:
INTRODUCTION
Corona virus (also called COVID-19) is believed to have been originated from Wuhan (China). This virus is a respiratory virus which primarily spreads through droplets generated by an infected person when he sneezes or coughs or through droplets of saliva or discharge from the nose. One third of global population is under lockdown on account of corona virus pandemic. More than on 200k people have lost their lives and another over 2 million have been infected by this virus across the globe. Industry across the whole world is operating under the fear of collapse of global financial markets. In India, the economic growth has been very sluggish. Now because of lockdown, unemployment has increased, interest rates have been reduced and even the stock market has become highly volatile. Although number of people affected from corona virus in India is relatively low in comparison to other countries, but investor sentiment is negative. Analysts believe that although the impact of Covid -19 would be significance on India, but the country will not slip into a recession. If we dwell deep into the history, there had been many different factors responsible for stock market crash. Here is a brief of top 10 market crashes in the history. In the year 1673, it was Tulip Mania in Netherland which crashed the market. In 1720, it was the South Sea bubble which brought the market down in UK. I 1873, triggered by an uncontrolled speculation, there was a great fall in the value of shares in Vienna. Even the government was not able to control the downfall which ultimately affected the whole Europe. The biggest and most significant crash in financial market occurred in the year 1929 in USA. In September and early October month of 1929, the stock prices began to drop because of which panic selling took place. On 29th October, the market lost $14 billion during the day. In the modern financial system, the biggest financial market crash occurred on 19 October 1987. This crash began in Asia, intensified in UK and ended with Dow Jones. The industrial average of Dow Jones came down to 22.6% for the day, which is still considered as the biggest downfall in percentage terms. In the year 1997 in Thailand financial market, the foreign investors lost confidence because of country’s debt condition which led to crisis in Asian stock market in 1998. The Dotcom bubble burst in the year 2000, where at the peak of NASDAQ index at 5048.62 on 10th March 2000, the big IT giants like Dell and Cisco sold their stocks. This action triggered panic selling in investors and the market lost 10% of its value. By the year 2002, investors had lost $5 trillion in this Dotcom bubble crash. US financial crisis in the year 2008 is known to everyone. With fall of Lehman Brothers, the financial mar ket in US collapsed very badly. This led to the fall in the global financial market. Again, the flash crash scam which happened on 6th May 2010 in US lasted for nearly 36 minutes only. It erased billion of dollars from US stock market. Last in the series is Chinese market crash which happened in the year 215-16. In July 2015 because of chaotic panic selling, approximately $3 trillion worth of shares were wiped out in a period of just three weeks.
|