Covid-19 Strikes Economy, How Hard Is The Impact?

What will recovery look like? hasn’t collapsed stock and asset values, but real life and real operation too. There have been occasions when financial markets have collapsed because it was being manipulated by speculators; someone fraudulently obtained money; someone borrowed too much, made too many bets on some positions and deceived the crowds; This time, there is no deception or speculation.

In the wake of the novel COVID-19 outbreak, the stock markets globally have witnessed a tremendous drop after the 2007–2008 financial crises.

The pandemic has presented the country’s economy with a number of new challenges. The spread of COVID-19 has sparked numerous debates as well. Several of them on how the Indian government should react to the economic fallout.

At this level, industrialists and economists believe that the economic outbreak is likely to deplete resources, the government must focus on maintaining the money sources running.


Amidst the news of COVID-19, stock market India indices experienced their first and ugliest one-day plunge on March 12, 2020.

The Central and several state governments declared lockdowns on 22 March 2020, bringing the economy to a grinding halt as the count of those infected soared past 450 and the death toll reached nine, raising fears of spreading infection.

Investor capital took a huge hit of ₹14.22 lakh crore on 23RD MARCH 2020 as exchanges went into a downward spiral, dropping a total of 3,934.72 points as quarantine in many states sent anxiety to investors.

After the indexes reported their worst ever one-day collapse, BSE-listed companies ‘ market cap too plummeted 14,22,207.01 crore to 1,01,86,936.28 crore.

Within just a month, the shares have lost losses of 40 months. In comparison, it took more than five months for the stocks to drop by about 36 percent in the economic crisis of 2007–2008

Market analysts said investors were afraid that unparalleled business turmoil would drive the country into protracted recession if the epidemic did not stop.

FPI so far amid the coronavirus pandemic has withdrawn a total of about 37,976 crores on a net basis from the Indian markets in March.

Between March 2–13, foreign investors pulled a net amount of about 24,776.36 crores in equity and about 13,199.54 crores in the debt category.

International investors have taken a flight to safer investment options, such as dollar-denominated asset classes and gold versus fixed-income securities from emerging markets such as India.

The Coronavirus pandemic has taken off about a third of the world’s market cap in just weeks. The current outbreak has sparked global panic and shaken market confidence.

The crude oil war between Saudi Arabia and Russia which injected instability into other assets is making things worse. Earlier, the Covid-19 scare just impacted stock and bond markets; now energy and currency markets are in chaos because of the crude oil battle.

The yes bank crises and failure of financial institutions such as DHFL have triggered domestic slowdown.


The epidemic has brought immense power and responsibility into the hands of governments. This is not a concern that can be tackled from the ground up but requires clear policy legislation, directives, and regulation.

  • Bring down the interest rates:

Lower interest rates are speculated to stimulate demand and revive economies. Monetary policy loses its power in a situation where there are no goods and services to supply, or the capacity to build and develop. But it is detrimental to keep the interest rates high. It will hamper money flow and damage recovery.

  • Protect employers:

The burden of caring for those who lose their income is high when the government tells people to stay indoors and not show up for work. Yet there could be no alternative but to allocate money to the poorer parts who will face incomeless financial hardship.

There are thousands of daily wage workers put out of jobs because of lock-downs. Widespread layoffs, cuts, will result in increased unemployment. Governments have to find the money and borrow heavily for welfare benefits.

  • Government intervention:

Governments have to endure the debt burden and invest in reviving economies. The deflationary effect would be deeper, without government spending. It is imperative to reduce taxes to increase demand and put more money in the hands of individuals and companies.

  • Credit facility must ease:

It is difficult to imagine lending standards being eased. Yet maybe we have no alternative. The situation will snowball into a bankruptcy crisis without budgetary support for companies and families.

  • Co-operation between global economies:

Teamwork between economies will promote global revival. A lot has been compromised and a lot has to be rebuilt, and that will not happen in the next quarter. Therefore, everyone should brace themselves for a down cycle.

The COVID-19 outbreak influences 195 countries with death tolls of more than 16,000 as of 24th March 2020. It is a rough time for the entire world.

Nevertheless, one must realize that the stock market India are like cardiograms. Just the way ups and downs are vital on a cardiogram, the economies will not be static either.

Investments aren’t about a point in time, but about a cycle over a significant time frame. Bear markets open up wide pocks of possibilities.

Experts believe intermediate corrections in a market are often safe because they eliminate the froth.




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Team Taxolawgy

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Taxolawgy is a global freelancing platform that connects businesses of all sizes, professionals, and agencies for all requirements.

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