Author(s) :

Shikha Menani.

Volume/Issue :

Abstract :

The world that we live in today is a drastically changed one. What started in a small province of China has brought such magnanimous change in the world economies that analysts are forced to expect sudden recession in all the sectors because of global lockdown.Covid19 or the novel Coronavirus started in the small province of China and spread to almost all countries of the world in a short span of time with the mortality rate being quite high. Lack of medical facilities and fear of the unknown further led to the deterioration in the worldwide economic condition. The pandemic has not only crashed the stock markets but also brought a huge change in the volatility which is an indication of panic amongst the investors. The study is an attempt to highlight the changes that have come up in the Indian stock markets with respect to price changes, volatility and investor confidence.

No. of Downloads :

11

KEYWORDS:

Covid, Volatility, Price-Earning Ratio

INTRODUCTION & OBJECTIVES:

Stock markets all over the world which were affluent with investors’ money suddenly saw the era ending when the impact of “The Unknown” started gripping the financial markets world over. Financial markets are considered to be an indicator of the economy’s health as a growing secondary market shows optimism amongst investors, increased consumption expenditure leading to increased output and profitability of industries. The converse is also true when the markets fall represent panic amongst the investors. The current stock market fall is attributed to a risk that has been neglected by the academicians, investors and financial analysts for a long time. Even when the pandemic started in China other countries including India considered it to be a regional issue and thought that they were resilient from the rising cases. However over the last few days the stock markets of all the major economies have crashed to such an extent that the financial health of the world can be considered to be at a low point. The study tries to highlight the changes that have cropped up in the Indian stock market as an outcome of the novel virus with the change of the year that is January 2020 to 15th April 2020. The study also points out how the price earnings ratio P/E and volatility index VIX has drastically worsened after the outbreak of the disease in the country. The pessimistic attitude of the investors has been visible with the lower circuit being triggered twice within a gap of 10 days – 13th march and 23rd March and the Sensex touching an all time low of 26.380 points on 23rd march 2020 thereby taking back the index to a value that was in the year 2015. The sectoral indices also presented a gloomy picture with the majority of the stocks ending in the red barring the pharma and healthcare. Foreign Institutional investors also have been net sellers from the emerging economies thereby further leading to the downfall of the stock markets. Investors are worried about the future as this might end up in a global financial recession that may take many years to recover. OBJECTIVE OF THE STUDY The pandemic has changed the very nature of every study and in the present scenario it has become imperative to analyze the impact of Covid19 on the stock market. The present study is therefore an effort towards the attainment of the following objectives:  To highlight the major changes that have come up in the Indian stock market with respect to volatility.  To identify the changes in the index values during the Covid pandemic. To analyze the Price Earnings ratio of the Bombay stock exchange (used as a proxy for the Indian stock market). These values would help to identify future prospects for the investors. The data related to volatility index, P/E ratio and index value has been taken from CMIE database Prowess.

DOI:

https://doi.org/10.58426/cgi.v2.i1.2020.94-104