NIWS slider

Impact of covid-19 on Stock market

//
Impact of covid-19 on Stock market

Impact of covid-19 on Stock market

Deepak Sharma 17 May 2021

Despite the government's national vaccination campaign, the number of new coronavirus cases has risen dramatically in recent weeks across India.

 

An unexpected surge may hamper the economy's rebound from the previous recession we saw during the First Wave of covid-19 in coronavirus cases. The stock market has been the most impacted region since it has continued to plunge, posing the most significant barrier to the country's economic development and drowning a large amount of capital by investors, resulting in losses. Even though the re-emergence of Covid-19 cases has caused stock markets to become uncertain, economists and brokerages are not concerned this time. Though it will stall the recovery of Covid-affected industries and postpone a full-fledged economic recovery, economists believe things are unlikely to get any worse, and the country should be able to handle it much better.

For the first time since November 6, India's daily Covid count exceeded 50,000 people on Wednesday. On Thursday, the country's overall number of active cases was 4.25 lakh, with 340 fatalities. This occurred on the first anniversary of the Covid lockout in India. Analysts said they don't expect any new national constraints like the ones implemented last year, but they concede that the rebound for Covid-affected sectors could be postponed for the time being.

 

Changes in stock performance

 

"Since the last market collapse, global stock markets, including Indian markets, have rallied dramatically. The Covid-19 pandemic is enough of a cause to expect a shift. Because of the rise in volatility, equity markets could correct in the near term. The likelihood of the markets entering a correction period is stronger than the likelihood of them rising dramatically from recent lows. The turbulence is likely to last for a while "Senior Vice President, Master Capital Services, Palka Chopra, says

The India VIX is currently trading about 23 percent higher, indicating improved market uncertainty. From the viewpoint of investors, the India VIX measures the uncertainty of Indian stocks.

A financial collapse like the one that occurred last year, on the other hand, is impossible. The return of the coronavirus, according to Abhinav Angirish, founder of Investonline, would trigger a 10-15% correction in the stock sector.

The sort of economic and industry damage that we witnessed in 2020 is impossible to happen again. There could be a lull in demand as economic growth slows down during the next several days or weeks, but things should be back to usual in a month and a half.

The markets would be much less worried about the second Wave than has been suggested, and we remain highly optimistic about demand for the remainder of the fiscal year and beyond. And when it comes to the business forecast, we stay highly promising.

Hotel stocks like Lemon Tree, HLV, Indian Hotels, and EIH have dropped 5-10% in the last week. ITDC lost 12% of its value.

Stocks in the aviation industry In the last week, SpiceJet has lost more than 15% of its value, while Jet Airways has lost around 10%. InterGlobe Aviation was utterly devoid of any passengers. PVR and Inox Leisure, the operators of theaters, have also lost about 5% of their value. In the last week, Westlife Growth, which operates the fast service restaurant chain McDoland in the south and west India, has lost 15% of its value, while Jet Airways has lost around 10% of its value. InterGlobe Aviation was utterly devoid of any passengers. PVR and Inox Leisure, the operators of theaters, have also lost about 5% of their value. The stock of Westlife Growth, which owns and operates the McDonald fast service restaurant chain in the south and west India, has fallen 15%. Domino's and Burger King India's parent company, Jubilant Foods, has seen its stock drop by as much as 5%.

 

Impact on economy

 

There is confusion regarding India's near-term growth outlook as it battles the second phase of Covid-19. India was gradually emerging from the pandemic-induced economic depression during the recessionary period. Nonetheless, India's economic growth has been slowed by the second round.

According to the RBI, India's GDP growth rate is 11 percent in FY22, according to the Economic Survey, and 10.5 percent in FY22. However, how much the economy responds to the Covid-19 shock would significantly impact whether this growth rate is achieved. While there hasn't been a nationwide shutdown yet, several states have chosen localized lockdowns or other restrictions to prevent the epidemic from spreading further.

The localized lockdowns have harmed a variety of retail and wholesale companies. However, the fact that products are still being moved and enterprises can operate can help mitigate the economic losses.

CRISIL, a rating firm, recently said in a note that the effects on economic production during the second Wave would be less severe than the devastation seen in 2020. Nomura, a Japanese trading company, has also stated that industry investment has decreased but negatively affects the economy.

"There are many reasons to believe that the economic consequences would be minimal. Other countries' experience shows a weaker connection between declining mobility and economic development. According to Nomura, manufacturing, fisheries, and work-from-home and online-based services should be robust among other sectors of the economy.

According to the study, the ongoing second Wave would only trigger a "short-term negative economic shock," which also stated that the medium-term growth outlook remains positive. Another encouraging sign for the economy is the possibility that the second Wave of Covid-19 will plateau over the next 20 days. Economists at India's most significant public lender, the State Bank of India, have made this forecast. According to the SBI survey, "based on the experience of other nations, we think India can hit its second peak when the recovery rate reaches 77.8%."

 

Impact on employment

 

One of the most significant consequences of the lockdowns in 2020 would be a dramatic increase in unemployment, especially in the unorganized sectors. India's unemployment rate reached 23 percent in April 2020.

The labor market began to rebound when the nation reopened, and by February 2020, the unemployment rate had dropped to 6.9%.

The unemployment rate, on the other hand, has risen to 8.40% this month. The situation is more acute in the country's metropolitan areas, where unemployment stands at more than 10%.

 

summary

 

A sudden increase in coronavirus cases can hamper the recovery from the previous recession in the economy. As it has started to fall, the equity market has become the most affected area. Economists agree that conditions will not worsen and that the world will be able to cope appropriately.

 

    Apply for Franchisee

  • Your Name (required):

  • Your Phone Number (required):

  • Your Email (required):

  • Your Organization (required):

  • Your Designation:

  • Your State (required):

  • Your City (required)

  • Why are you interested in NIWS?

  • Your Message

  • Understand that this form collects my personal data to be used in accordance with Privacy Policy here.

Start with a demonstration class.