IMPACT OF COVID-19 ON THE

INDIAN SECURITIES MARKET

FINANCIAL MARKET MANAGEMENT
 EFFECTS ON THE GLOBAL STOCK
MARKETS
• US stock markets witnessed one of their worst quarters due to COVID-19. The IMF
expects that 170 countries will witness regrowth in their per capita income this year.
There were projections for a V-shaped recovery for the global economy after the
COVID-19 pandemic. However, the IMF’s baseline scenario takes into account a “partial
recovery in 2021.” There has been a V-shaped recovery in US stock markets over the last
two weeks. The market has reacted to recent unpredictability with large drops,
triggering a market wide circuit breaker four times in March. The safeguard pauses
trading for 15 minutes in hopes the market will calm. The U.S. Securities and Exchange
Commission mandated the creation of market-wide circuit-breakers to prevent a repeat
of the Oct. 19, 1987 market crash, in which the Dow plunged 22.6%. Since then, they
have only been triggered once in 1997 before the four times this March.
• China’s GDP took the worst hit since the disastrous Cultural Revolution in 1976,
plummeting by 6.8 per cent in the first quarter of 2020 as the country took
unprecedented measures to fight the coronavirus pandemic that brought the world
'second largest economy to a standstill.
 COVID-19 AND THE INDIAN
STOCK MARKET
• Investor sentiment in India is so low that despite relatively lower cases,
Indian market has fared worst among global peers. Indian stock market has
lost 26 per cent in dollar terms between February 1 and April 9, compared
with a fall of 20 per cent and 14 per cent in the European and US markets.
Emerging markets, reflected by the MSCI EM index, declined 15 per cent
during the same period. The current market has crashed around 30 per cent
in less than three months.
• Due to COVID-19, no one knows when the economy will be back on track.
Some Experts even compare this meltdown of economies with the “Great
Depression” of the 20th Century.
• COVID-19 Is A Black Swan Event Throughout history, there have been highly
improbable events that catch almost everyone by surprise and can
potentially have a large impact on the status quo by disrupting human
activities and creating havoc. Such kind of events are called black swans.
 PROBLEMS FACED IN THE MONTH
OF MARCH-APRIL
• Stock markets around the world witnessed one of the most painful
correction phases in the month of March 2020.

ALL SECTORS IN A SEA OF RED

• Among sectors, all the BSE indices gave negative
returns in March 2020. BSE Realty, BSE Bankex, BSE
Finance, and BSE Auto Index fell more than 30%.
• It was a double whammy for banking and finance
stocks that witnessed most of the brunt on the back of
coronavirus outbreak and Yes bank crisis.
 GOLD PRICES SHINES
• Base metals also remained under pressure as
lockdown imposed in several parts of the world
curbed demand, pushing stockpiles higher.
• However, gold prices rose 3% in March 2020 as
demand for the safe haven asset rose with market
participants bracing prolonged uncertainty in the
wake of the novel coronavirus outbreak.

Record Wealth Destruction

• In the month of March 2020, the Sensex fell as
much as 23%.. That honor goes to October 2008
where markets tanked 23.9%, beating the 23.1% the
market lost last month by a whisker. However,
March 2020 wins hands down in wealth destruction.
• Wealth destruction of Rs 4.4 lakh crores back in
2008 pales in comparison to the Rs 14.6 lakh crores
worth of wealth destroyed on the Sensex in the last
month alone.
 RUPEE HITS RECORD LOW IN MARCH 2020
• Massive sell-off in equities and bonds led to a huge
fall in rupee against the dollar in the month of
March. The rupee hit a record low of 76.32 against
dollar earlier this week. Most of the selling
pressure for rupee was seen on the back of slump
in equities and currencies globally. Investors were
concerned that support measures from
governments and central banks may be insufficient
to halt the economic damage caused by the
coronavirus pandemic.
RUPEE CONTINUES DOWNTREND
• Rupee Hits Record Low in March 2020.
Massive sell-off in equities and bonds
led to a huge fall in rupee against the
dollar in the month of March. The
rupee hit a record low of 76.32 against
dollar earlier this week. Most of the
selling pressure for rupee was seen on
the back of slump in equities and
currencies globally. Investors were
concerned that support measures
from governments and central banks
may be insufficient to halt the
economic damage caused by the
coronavirus pandemic.
CRUDE OIL CONTINUES FREE
FALL
• The fall was seen due to oversupply amid
subdued demand. Oil prices crashed last month
in what was the worst price dip since the 1991
Gulf War with Brent prices plunging to US$ 31
per barrel. Oil markets faced a double whammy
from the coronavirus outbreak and price war
between Saudi Arabia and Russia after OPEC
producers failed to agree on deeper cuts to
support oil prices.
• Early March- Shares of oil marketing
companies such as Hindustan Petroleum
Corporation (HPCL), Bharat Petroleum
Corporation (BPCL), GAIL, ONGC, Indian Oil.
Corporation  and Indraprastha Gas were in
focus in March amid record low crude oil prices.
 IMPACT ON NIFTY 50
The headline grabbing news include:
• 19% rise in Nifty50 index after a precipitous fall in March.
• Slowdown in selling of Indian equities.
• Focus on pharma stocks due to supply of drugs for Covid-19 treatment.
• Futures of WTI crude crashing by 302%.
• Closing of 6 credit risk funds of Franklin Templeton AMC.
• Debilitating impact of corona virus on economy
• After a month of serious wealth destruction, stock markets offered a
noteworthy respite to investors, as global indices rallied, to recover half of the
losses incurred in March. Nifty50 index stocks performance was much better,
with 46 out of the 50 stocks ending in positive territory for the month. Metals
sector also showed traction owing to restart of production facilities in China.
COMPARING THE 2 MONTHS
• In conclusion, for stock market investors, April
has been a better month in comparison to March.
This was in line with the Nifty50 retracement of
50% as per technical analysis and needs to be
seen if it can move up to the 61.8% retracement
level or fall back down. The Wall Street saying
that “Sell in May and go away” can also come
into effect, owing to technical and fundamental
reasons.
• Over the last 10 years, for the month of May,
Nifty50 gave negative returns 3 times, was flat 1
time and positive 6 times. How will May 2020 fare
for retail investors needs to be seen, in light of
the demanding pressures on economy and
livelihoods of the Indian populace.
 CONCLUSION
Recovery In The Current Stock Market,
• It would be unreal to expect a quick economic rebound from the current COVID-19
effect. Though the financial crisis is inevitable, considering all-out efforts by central banks
and fiscal authorities, to soften the blow, deep economic slump might be avoided. The
problem in the current scenario is that until we know how quickly and thoroughly the
public-health challenge will be met, economists cannot predict the endgame of this
crisis. Trade-in 2020 is expected to fall steeply in every region of the world and basically
across all sectors. But global trade could rebound rapidly after that. However, it would
depend on how quickly the pandemic is brought under control, and the policy choices
which the governments took to support their economies. Once this pandemic is over
with normalcy returning to business and economy, the stock market will start moving in
a positive direction, and as witnessed in the past, recovery would be faster than
expected. It is true about the market that whether it is the correction or growth, both
phases make equity or stock market interesting and worth taking exposures.
THANK YOU
KRIPA KHAITAN

VIDISHA MUNDHARA

VANSHIKA SARAOGI