Impact of COVID -19 on Indian stock market

Apr-24-2020Blog by – Mr. Ashish AjmeraRead Time: 3 Min.Word Count: 732
424Impact of COVID -19 on Indian stock market

The deadly coronavirus has taken the world on a toll. None of us have ever experienced such a situation before, and thus nobody knows how to handle it effectively. It isn’t just the physical aspect of things but the stock market, global and Indian, has also become a part of these coronavirus effects.

With COVID-19, the stock market has only been crashing and has become highly volatile. While people were panic-buying in the real world, in the trading world, we observed people panic-selling their shares. The global effect on the markets is baffling really because this is a sign of a kind of crash that will affect employment for over a year, if not more. Salary cuts, down-sizing, all of this has already begun.

The coronavirus effect on the stock market started with the imports and exports affected by China, which is an export economy. With this we saw an effect on oil, LNG, agricultural goods, and metals. 2020 oil demand is the lowest we have seen in a decade.

On 20th April, we saw the US crude oil prices dip below $0 for a barrel. It went negative! Which means that the sellers are paying buyers to take deliveries. 

In the Indian market, we saw IRCTC peaking at about Rs 2,000 and by March 17, it had fallen about 50%. The average fall of stocks currently is within 20-30%. While the NYSE halted its trading operations several times in the recent past, Sensex saw itself fall from its highest of 42,000 to 32,000 in a span of mere 3 months. This has left everyone clueless.

While the hyper volatility has affected the gains people have been making over the years, the stock market crash due to COVID-19 is making it seem like stocks are upon sale. As an online stock trading company, we can tell you, while it isn’t a good thing for the stock market to hit this low, it is an opportunity to invest in companies that usually have a good return and see them enter the bull market once the world has dealt with coronavirus.

That being said, we are facing an economic shutdown. Some people can work from home, a lot of people’s jobs have come to a complete halt. And this economic halt along with travel restrictions are the core reasons to affect the Indian stock market. And the worst might still be awaiting us.

With panic all around, investors tend to make more emotional decisions rather than practical ones that will help them with their portfolio. To curb this, we highly recommend an online stock trading company, where you wouldn’t have to worry about the social distancing aspect as well! From the safety of one’s home they can access the suggestions of a stock advisory company in Mumbai.

In a situation like this one, what is always recommended is the clichéd ‘testing of waters’. Metaphorically, one should neither sail too hard and fast against the stream nor with it. This essentially means that while it might seem like the stocks are on sale, one shouldn’t binge or splurge on them either. A balance is always quintessential. Investing in the market in this current situation also depends on what is it that people are looking to get from it? The intent is what determines how deep one should be going in during the stock market crash from COVID-19.

This entire situation will bring in a massive shift in not just the stock market and its recovery, but it will also bring in a massive shift in the collective mindset of investors in India. Safeguarding for such disastrous situations was not a priority on most investors’ list up until now. Looking at the coronavirus effects on the stock market, it has quickly risen up to be top-most on the priority list.

We also believe that not just investing, but also saving more is a pattern that will get reinforced in the Indian stock market. Saving has always been a typical Indian house-hold scenario, but more in cash rather than in a dematerialized format. The patterns of investing and cashing out are bound to keep changing over the next year or so, which means we are in for a continuing volatile market.

If you need more clarity on these subjects, reach out to an online stock trading company to get expert advice for your portfolio!

Read more: Stock market crash: Is it a good time to invest?

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Attention Investors
1. Stock Brokers can accept securities as margin from clients only by way of pledge in the depository system w.e.f. September 1, 2020.
2. Update your mobile number & email Id with your stock broker/depository participant and receive OTP directly from depository on your email id and/or mobile number to create pledge.
3. Pay 20% upfront margin of the transaction value to trade in cash market segment.
4. Investors may please refer to the Exchange's Frequently Asked Questions (FAQs) issued vide circular reference NSE/INSP/45191 dated July 31, 2020 and NSE/INSP/45534 and BSE vide notice no. 20200731-7 dated July 31, 2020 and 20200831-45 dated August 31, 2020 dated August 31, 2020 and other guidelines issued from time to time in this regard
5. Check your Securities /MF/ Bonds in the consolidated account statement issued by NSDL/CDSL every month.
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