Impact of COVID19 on Capital Markets - is it an opportunity to invest or to remain cautious?
SANTHOSH
M (19MBA0011), PRITHIVIRAJ
G (19MBA0094), SIVANESAN M (19MBA0002), VISHMITHA K (19MBA0103), PAVITHRA V
(19MBA0003), MOHANA PRIYA MA (19MBA0005)
VIT
Business School, VIT UNIVERSITY, VELLORE, TN.
ABSTRACT
No previous infectious
disease outbreak has impacted the stock market as powerfully as the COVID-19
pandemic. Equity markets have corrected 25-35 percent from their peak levels
due to many reasons which also include the outbreak of COVID-19. There has also
been a notable correction in crude oil prices failure of communication between
Opec and non-Opec producers. The market capitalization of more than 27 companies in
BSE500 index has fallen below Rs.20,000 crores due to the COVID-19 outbreak.
According to reports, the coronavirus pandemic has been more volatile than the
global financial crisis of 2008. The price-earnings ratio of Sensex is less
than 18 which is less than the historical range of 20-24. In the
financial year 2020, the mid-cap index fell by 26 percent while the Sensex fell
by 22 percent. The central theme of the paper is to analyse the state of the capital market and crude oil prices during the Covid-19 pandemic and what is
the suggested opinion on investing in the capital market at this time. To
conclude, many investors are panic selling which has pushed the capital market
to new lows, therefore if we are wishing to invest, it is better advisable to
invest in the stock market if we are interested in holding for a long period of
time or go for a buy low sell high approach as we all know by the previous
similar pandemics like the 2008 financial crisis, the market tends to reward
those who invest in this period of time in the correct stocks.
1. Financial market
analysis for the year 2020:
1.1 January and
February 2020
The Indian stock market
was on its winning streak in December and January with around 1.5% advancement
in Nifty 50 and 0.7% S&P BSE Sensex benchmark indices. But the benchmark
didn’t last long as it fell down by 2.7% and 3.1% respectively during the
second fortnight of January 2020 due to the union budget which followed on to February.
The Nifty 50 faced a 2.5%
loss on a single day on February 1, 2020 and the S&P BSE Sensex being no
exception fell down by 2.4% as well. This was not only evident in the major
indices but also the CMIE overall share price index which also declined by
2.2%. Aggregate market cap was also eroded by 2% on February 1,2020. This was
all due to the union budget not scaling up government expenditure adequately
which made the investors react. However, the market managed to overcome the
budget blues in the upcoming trading days i.e. February 3 and 4. The rupee
value also hovered around 71 per USD mark.
Crude oil prices were
still rising in January 2020 touching the USD 70 per barrel mark since May
2019. This was the result of the US and China trade war and the problems
surrounding the OPEC + countries. This is where the COVID-19 first shows its
influence in the economic activities where the Crude oil prices entered a free-fall state fearing the demand taking a hit due to the coronavirus outbreak in
China. The price of Crude oil fell 12 USD from Jan 6 to Jan 31 touching its
lowest since October 2019. On the other hand, gold prices skyrocketed and grew
greatly due to coronavirus.
Indian stock market was
still going downwards into the red for the second consecutive month in February
2020. Nifty 50 saw a decline by 6.4% during the month after falling by 1.7% in
the previous month which makes it the steepest monthly fall witnessed for the
last 17 months. Due to the Union budget, the Nifty 50 dropped from 12,355 on
Jan 16 to 11,662 on Feb 1. Due to the coronavirus spreading rapidly, foreign
investors (FPI) have panicked and the Nifty 50 declined to 11,202 by the end of
Feb 2020.
The S&P BSE Sensex showed no exception and also fell by
1.2% in January 202 and another 6% in February 2020. The CMIE Overall Share
Price Index also fell down by 6.2% in February 2020. 101 government companies
lost 11.4% in February 2020 and 2,150 private companies lost 5.4%. The mid-caps
fell down by 9-10% and the small-caps fell down even steeper falling around
11-13%.
CMIE transport services index declined by 8.3% in February
2020 and the CMIE tourism industry index crashed by 15.9% on fears of the
coronavirus and the fears of business getting hit by cautious travel advisories
issued by many countries. On the other hand of positivity, CMIE hotels and
restaurants industry index gained 8% during February 2020. Indian Railway
Catering and Tourism corporation yielded a massive return of 44.8% during the
month.
Source: economicoutlook.cmie.com
Price to earnings (P/E) multiple of the Nifty 50 fell from
28.3 times in December 2019 to 25.5 times in February 2020 and the S&P BSE
Sensex also shrank from 26 times to 23.2 times. Popular broking houses believed
that the market will improve once the spread of coronavirus is arrested and the
economy starts showing signs of revival. The returns are anticipated to be
around 14-15% till December 2020.
Foreign Portfolio investors sold equities worth USD 1.8
billion and debt worth USD 1.3 billion. The withdrawals from equity in February
2020 in net basis amounted to USD 197 million and from debt USD 14 million. The
FPI continued to pull out USD 785 million from the Indian capital market during
the first four days of March 2020 (USD 469 million worth equity and USD 294 million
worth debt instruments). Mutual funds pumped in another 3.9 billion in February
2020 and invested USD 1.8 million in Indian debt instruments in February 2020.
These were the lowest monthly investments since July 2018.
The Indian rupee also changed from 71.5 per USD to 72.2 per
USD. In march it reached the hight of 73.6 per USD due to risk of coronavirus
cases increasing worldwide. This was not the case with Euro and British pound
because they decreased comparing to previous prices.
Oil prices was still under a free fall state where they
declined from 67.1 USD per barrel on December 31, 2019 to 58 USD per barrel on
January 31,2020 and fell further to 51.2 per barrel at the end of February
2020. Gold prices however touched a 7-year high of USD 1,672 per troy ounce as
of February 2020 as it was the major investment interest due to the coronavirus
impact. The gold prices were 2.3% higher than the preceding month and almost
21% higher than a year ago. This was the case as of the data analysed till the
end of March 2020 and summarising and comparing them with the previous months
and previous years as this was the month the coronavirus showed a huge impact
on the capital market and the economy.
1.3 April 2020:
Figure 3. Source: economicoutlook.cmie.com
March 2020 was an
unbelievable nightmare for the Indian equity markets. Coronavirus induced panic
selling among the investors causing a huge 23% deduction in the market cap of
companies listed on the National Stock Exchange (NSE) within just one month.
The Nifty 50 that started its southward excursion from
12,201 on February 12, 2020, declined to 10,458 by March 11, 2020. On March 12,
2020, the World Health Organization (WHO) reported Covid-19 flare-up a
pandemic, after which the Nifty 50 drooped 8.3 percent. This was the biggest
misfortune Nifty 50 had endured in a solitary day since the Global Liquidity
Crisis of 2008. On March 23, 2020, the Nifty 50 endured one more sharp fall, of
13 percent following PM Modi's declaration of a 21-day across the country lockdown
to capture the spread of Covid-19. The fall was not just more extreme than the
previous one saw on March 12, but at the same time was the steepest fall
endured by the Nifty 50 since July 1999.
The BSE S&P Sensex
also showed nearly the same loss of 23% of its value during March 2020. Despite
seeing a 23% fall in market cap, the volumes traded in the Nifty 50 increased
from Rs. 8 trillion in February 2020 to Rs. 10.1 trillion in March 2020,
similarly the BSE S&P Sensex saw a massive increase from Rs. 157.7 billion
to Rs.463.4 billion in the same period.
After the March 2020 crash the valuations of Nifty 50 and
S&P BSE Sensex look increasingly practical. The P/E various of Nifty 50
remained at 19.4 occasions and that of S&P BSE Sensex remained at 17.8
occasions on March 31, 2020.
CMIE Overall Share Price Index (COSPI), which is a more
extensive market marker including more than 2,000 effectively exchanged scrips,
likewise declined by 23 percent during March 2020. The fall was wide based,
with every one of the 10 deciles of scrips by showcase top announcing twofold
digit misfortunes during the month.
Despite the fact that March 2020 auction was seen no matter
how you look at it, it was progressively fierce if there should arise an
occurrence of enterprises that are hit the hardest by the Covid-19 pandemic and
the ensuing lockdown. The CMIE lodgings and the travel industry administrations
industry list, involving 36 effectively exchanged scrips, lost 43.5 percent
during March 2020, trailed by CMIE land industry record which lost 41.3
percent. The CMIE resource financing administrations record, the CMIE banking
file, the CMIE metals industry list, the CMIE car and ancillaries list and the
CMIE materials list detailed a fall in the scope of 30 to 35 percent. Indeed,
even power, mining and food item organizations, which have been absolved from
the lockdown, couldn't get away from the unrest. The CMIE beautifiers,
toiletries, cleansers and cleansers industry record, nonetheless, posted 1.1
percent gain in March 2020.
FPI continued to pull out
another USD 15.2 billion from the Indian capital market in March 2020 which was
their biggest sell off since January 1999. During a similar scenario during the
fiscal year 2008-09, FPI only pulled out USD 9.9 billion.
FPIs turned to persevering selling from mid-February 2020
as rising instances of Covid-19 fanned apprehensions of the worldwide economy
slipping into downturn. In March 2020, they sold Indian values worth USD 7.9
billion and left from obligation instruments worth USD 7.8 billion.
Mutual funds in India saw a less expensive purchasing
opportunity in the midst of this disorder. They made net acquisition of Indian
values worth USD 3.8 billion in March 2020. These were their most noteworthy
month to month buys over the most recent one year. Mutual Funds stayed net
speculators in the red instruments during the principal fortnight of March
2020. They began booking benefits from there on fully expecting a rate cut by
the RBI. During the whole month of March 2020, they made net deals of Indian
obligation instruments worth USD 1.6 billion.
Indian rupee deteriorated by 4.2 percent against the US
Dollar in March 2020, surrendering to feeble market suppositions brought about
by Covid-19 pandemic. The household cash unit began debilitating against the
greenback since the third seven day stretch of February 2020. From Rs.71.59 per
USD on February 20, 2020, it debilitated to Rs.72.19 per USD by February 28,
2020. The rupee proceeded with its southward excursion, devaluing to Rs.75.39
per USD on the most recent day of March 2020. The rupee devalued against
the Euro as well, from Rs.78.07 per Euro in February 2020 to Rs.82.34 per Euro
in March 2020. Be that as it may, it revealed a gentle thankfulness against the
Sterling Pound and the Japanese Yen in March 2020.
Gold costs that were moving northwards for past numerous
months, dropped from USD 1,683.7 per troy ounce on March 6, 2020 to USD 1,474.4
per troy ounce by March 19, 2020. The fall in gold costs was as opposed to the prevalent
view that financial specialists dump less secure resources in the hours of
vulnerability or emergency and park their cash in gold which is considered as
the most secure resource. However, this time, gold costs fell alongside other
resource classes as speculators hurried to raise money in the midst of elevated
frenzy in monetary markets over the Covid-19 pandemic, as indicated by media
reports. Financial specialists began checking out the yellow metal by and by in
the last 50% of March 2020 which pulled the costs back to USD 1,609 for every
troy ounce by March 31, 2020. For the long stretch of March 2020, gold costs
found the middle value of at USD 1,591.9 per troy ounce, a smidgen lower than
their February 2020 normal of Rs.1,597.1 per troy ounce.
Raw petroleum costs
descended tumbling in March 2020. Indian crate of unrefined petroleum was
esteemed at USD 22 for each barrel on March 31, 2020, much lower than its
estimation of USD 51.2 per barrel toward the finish of February 2020. Oil costs
had begun relaxing from around USD 67 for every barrel toward the start of
January 2020 on fears of a flexibly excess. In March 2020, the interest fallen
totally the same number of nations around the world turned to lockdowns to
capture the spread of Covid-19. What exacerbated the situation was that OPEC
pushed up its yield by 90,000 barrels for each day (bpd) to 27.93 million
barrels for every day (mbpd) in March, following breakdown of its creation cut
settlement with Russia. Oil inventories in the US flooded by 13.8 million
barrels in the week finished March 27, 2020 to 469.2 million barrels, as
indicated by the US Energy Information Administration (EIA).
The Indian financial
exchange pared a large portion of the misfortunes it acquired in March 2020
before the finish of April 2020. The Nifty 50 progressed by 14.7 percent
subsequent to losing 23.2 percent in March 2020. BSE S&P Sensex likewise
rose by 14.4 percent, in the wake of shedding 23.1 percent of its incentive in
March 2020. The CMIE Overall Share Price Index (COSPI), which houses more than
2,000 effectively exchanged scrips, painted a comparable picture. The COSPI
rose by 13.8 percent in April 2020, as against a fall of 23 percent in the first
month.
Markets took a positive prompt from news drifted by US
president Donald Trump that enemy of jungle fever medicate hydroxychloroquine
is a likely solution for Covid-19. Upon the US presidents' request the Indian
government re-opened fares of hydroxychloroquine to a couple of nations on
April 7, 2020. The move did some incredible things for the value advertise,
which increased more than seven percent on a solitary day. Markets figured out
how to continue the increases, yet additionally progressed further in the
accompanying three weeks as positive news for the business continued streaming
in spite of an ascent in Covid-19 cases. The administration allowed ventures in
green and orange zones to begin activities from April 20, 2020 and gave its
gesture for working of neighbourhood and independent shops from April 25, 2020.
Mid-tops and little tops posted more than 20 percent
returns in April 2020. Additions for their bigger partners, be that as it may,
were restricted in the scope of 13 to 15 percent.
The market recuperated in April no matter how you look at
it. Top gainer businesses were drugs and pharmaceutical, oil-based commodities,
vehicle and metals whose stocks yielded 20-30 percent returns during the month.
The slow pokes were transport administrations, power, hardware and pearls and
adornments scrips which posted single-digit returns. Supplies of most different
businesses detailed twofold digit gains in April.
Market valuations improved. P/E products of Nifty 50 and
S&P BSE Sensex, which had as of late fallen underneath 20 without precedent
for a long time, crossed the imprint again in April 2020. The P/E numerous of
COSPI expanded to 36.8 occasions in April 2020 from 31.9 occasions in March
2020.
Foreign portfolio investors (FPIs) kept on hauling cash out
of the Indian capital market in April 2020. They made net deals of USD 2
billion in April, in the wake of having dumped values and obligation worth USD
15.2 billion in March. FPI selling has been activated by the Covid-19
emergency, which incited speculators to come back to place of refuge resources
like gold and dollar-named protections.
In April 2020, FPIs made net deals of government and
corporate securities worth USD 1.7 billion. They began losing enthusiasm for
obligation instruments since November 2019. During November 2019-February 2020,
they sold obligation worth USD 2.8 billion. In March 2020, their deals topped
at USD 7.8 billion. Furthermore, in April 2020, they kept on evading government
and corporate securities. They, in any case, put USD 523 million in the red
trade exchanged funds through the wilful maintenance course (VVR) in April
2020.
FPIs left from Indian values worth USD 904 million in April
2020. This was the third month straight where FPIs were net venders of value.
In February 2020, they had sold values worth USD 198 million and in March 2020,
the deals had topped USD 7.9 billion.
Mutual funds normally will in general slurp up values
modest when the FPIs disregard them. In any case, in April 2020, they too sold
values worth USD 725 million. Likewise, they left from obligation worth UDS 25
million.
Brent crude oil cost, after about splitting among January
and March 2020, plunged to a two-decade low of USD 18.7 per barrel in April
2020. The Indian container of crude oil arrived at the midpoint of just a
smidgen higher at USD 20.5 per barrel during the month. Gold costs continued
their northward walk in April, in the wake of balancing out in March 2020. They
spiked by as much as 8.3 percent in the initial 14 days of the month, riding on
the yellow metal's sheltered paradise request. Costs drifted around the USD
1,700 for each troy ounce mark in the second fortnight of April 2020. On a
normal, a troy ounce of gold got USD 1,683 in April 2020, which was its most
noteworthy valuation over the most recent seven years. These are the data which
has been collected and analysed regarding the Indian Financial market and
economy which includes crude oil prices and gold (yellow metal) beginning year
2020 and up until May 2020.
2. Critical Evaluation
of capital market
Figure5. Source:http://economicoutlook.cmie.com/kommon/bin/sr.php?kall=wshreport&tabcode=001121011011000000&repnum=24242&frequency=M&colno=1
From the above table we
can see that in February 2020, funds raised from equity has decreased
significantly due to the COVID-19 outbreak and when people were afraid to
invest in the capital market, But soon we can see that the people have realized
that investing now is the right and profitable time if they are planning to
hold on to the securities, that is why in March 2020 the funds raised from
equity has risen again.
The market is always dynamic but one thing people
understood that if they invest in the time when other investors and shareholders
are panic selling, that means the securities will yield great results in the future.
Figure
6.
From
the overall CMIE share price index we can see that the Index market
capitalization has dropped to 112,836,928 in March 2020 which is the lowest it
has been since a very long time. This is proof that all the sectors in the
market were struggling and that induced the panic selling attitude among the
investors, leading to a huge loss in rate of capitalization and an extreme
increase in trading volumes (10,706,004).
Figure 7. Source: economicoutlook.cmie.com
Financial sector is one the biggest
hit sector in the secondary capital market with index market capitalisation
reaching 28,201,391 which is the lowest it has been since March 2017. All the
sectors were affected but the Covid-19 affected the financial sector the most.
From
the below table (NSE trading details) we can notice that the market
capitalisation has fallen down by a significant percentage and there has been a
significant increase in trade volumes and numbers. This shows us that the
investors have started to panic sell and some investors have finally decided to
let go of the stocks they have been holding on.
Figure
8. Source: economicoutlook.cmie.com
3.
Future of Investments
Figure
9. Source:http://economicoutlook.cmie.com/kommon/bin/sr.php?kall=wshreport&nvdt=20200510214146120&nvpc=035000000000&nvtype=ANALYSIS+%26+OUTLOOK&oporder=1
Capital
formation is predicted to be hit the hardest by Covid-19 pandemic induced
lockdown. Analysts state that Gross Fixed Capital Formation (GFCF) will
contract by 22.2% during the year 2020 – 21.
A fall in real GFCF isn't completely
strange in India. It has fallen in 10 of the 60 times since 1960-61. The
steepest fall was of 5.6 percent in 1970-71. The constriction this year, be
that as it may, is relied upon to be complex greater. This tremendous fall in
GFCF likewise comes after the last seventy-five percent of 2019-20 having seen
compression in GFCF.
The
lockdown hits GFCF in three different ways. To start with, it quickly brought
development and plant erection exercises to a crashing end during the lockdown.
Second, it has made work and crude material deficiencies with broken gracefully
chains that make the resumption of work after an unwinding or lifting of the
lockdown exceptionally troublesome. Third, it will prompt a reassessment of all
CAPEX spending by organizations and governments.
These constraints are expected to
result in a steep 55% y-o-y contraction of real GFCF in May 2020 and another
2.5% shrinkage in June 2020. Going on this basis, the quarter of April-June
2020 is expected to end with a 57.5% contraction in GFCF. Demand constraints,
along with continued labour shortages due to unemployment are expected to dent
GFCF by 18 percent in the September 2020 quarter. Work-related issues are
relied upon to get settled generally by October-November. Be that as it may,
feeble interest will keep on gouging GFCF by eight percent in December 2020
quarter and by four percent in the March 2020 quarter. Accordingly, GFCF will
shrink by 22.2 percent in 2020-21. We expect capital formation in the private
corporate sector to fall by 30 percent in 2020-21.
There are three huge supporters of
GFCF in India. Private ventures contribute 37 percent to it, government, nearby
bodies and open segment endeavors (PSUs) contribute 24 percent, while the
parity 39 percent originates from family units and non-benefit establishments
serving families (NPISH) such as gurdwaras and sanctuaries.
It is improbable that ventures would
return at any point in the near future. For this, family unit salaries must be
fixed, purchaser assessments must be re-established, limit the usage of enterprises
must ascent and business certainty must be revamped. There is an excessive
number of achievements to be met before we can anticipate that speculations
should ricochet back.
4.
Impact of crude oil price falls in India
Consequently,
there has been a 24% fall in crude oil prices. India will also benefit
majorly from the correction in crude oil prices. India imports around $115
billion value of crude oil annually. Even a small correction of 1% in crude
oil prices saves India $1.2 billion annually.
The BSE has introduced trading at negative prices for crude oil. BSE has made changes to its trading platform to
accommodate the negative prices of crude oil. This came in weeks after crude oil
prices dropped to a negative $37.63 per barrel. The simulation of the revised
pricing mechanism started on May 4, 2020. The Brent crude futures offered by
BSE can be traded in negative if the benchmark falls to such prices. BSE quoted
“To facilitate testing of this feature in the simulation (test) environment,
the trading price range of Brent Crude Oil futures contracts shall be suitably
updated to accept orders at negative price levels and execute trades”
5. Inferences and
analysis given by analysts and investors
In India, we also witnessed YES
Bank being put under a moratorium and being taken over fortunately by the
government and RBI to prevent negative fallout of the situation.
All the global markets including Dow
Jones (USA) has seen a decline in global equity markets. Nifty (INDIA) has
seen a %decline of -26.89% from comparing data from 31-Jan-2020 and
20-Mar-2020. Nifty Midcap 100 (INDIA) has also seen a drastic %decline
of -29.70%. S&P and BSE Index experienced a hit of
over 20%. The foreign exchange reserves also saw a decline of $6.5billion.
Nifty declined nearly 23 percent on a year-to-date basis till April 27 with
IndusInd Bank dropping the most at73 percent. Half of the Nifty 50 stocks,
financials not included, are trading at a single-digit valuation as Indian
equity markets are nearly 1/3 (one-third) off record-high levels they scaled in
January. Commodity, metal and oil stocks are trading at single-digit 12-month
forward price to earnings ratio due to slumping metal prices and lower oil and
gas prices. while stocks including Nestle, Bharti Airtel, HUL, and Asian paints
are seeing an increase in the 12-month forward price to earnings ratio than The 10-year average for the respected stocks. Among the 19sector sub-indexes
compiled by BSE, a gauge of health-care stocks has advanced 14% this
year as the drug makers have moved into the spotlight amid the pandemic.
The Indian equity market declined
nearly by 6% on May 4th (Monday). Nifty Index went down by 5.74
percent. Indian Overseas investors have withdrawn over Rs. 10,000 crores
from domestic capital markets in April so far. They also took out a record
Rs.1.1 lakh crores in March on a net basis from both equity and debt markets.
This was mostly caused due to the COVID-19 outbreak.
Investors have been adding more money
in the market during the bad phase because of one main reason and that is historical
perspective. In a similar historical market crisis such as Asian financial
crisis (1997) and the Global financial crisis (2008), even though there was market
correction even more drastic (-33% in the Asian Financial Crisis and -61% in Global
Financial Crisis) the returns which followed in a short span of 6 to 12
Months where the investors during the trough (crisis) were very huge and
went up to 109%. Relying on this historical data might not be the best
of an idea because markets never give returns in a linear fashion. Investors are willing
to put in more money in the market during the COVID-19 is because they believe
it will give similar returns as like the similar previous financial crises.
Researches have shown that if the virus
is contained within a maximum of 3 months, we can expect Normalisation of Earnings
(NoE) in the Financial Year 2021. It is also said that the crude oil global
meltdown is not going to help India gain economic growth because it is just a
reflection of the poor fundamentals of the global demand situation but will
help India save a couple billion dollars. Firms with high net cash on their
balance sheet will be in a better position to overcome this situation. Also,
firms with a history of superior capital allocation practices (higher RoCE),
consistently high growth CAPEX, and high cash generation capabilities will have
added advantage when the situation eases. Investors are also advised to invest
in debt-free companies and avoid companies which have a direct impact of
COVID-19 or a pause is helpful for an average investor if they are not ready
for long-term goals.
Stock markets reward patient long-term
investors. There’s no better way pf making money other than owning a great
bunch of Indian companies and ignoring the inevitable ups and downs of the
market. Owning stocks for the long-term is a sure shot way to success. There were
drops in markets due to panics such as swine flu but also saw a huge return
after the situation eased.
6.
Recovery from Covid-19
India
is expected to have a V-shaped recovery post-COVID-19 and the turnaround is
expected to be faster than some other economies. The reason why it is expected
to have a “V” shaped recovery is because this is not a natural disaster a situation such as a flood, cyclone or an earthquake and no capital has been
destroyed and the labour force is ready to work once the lockdown is lifted.
This means that India has a better chance than most of the other countries. This
is only possible if we adopt the right policies to achieve this V-Shaped
Recovery. By the right policy, we actually mean measures that can help SMEs
(Small and Medium Enterprises).This is one of the many things that need to be
implemented along with appropriate structural reforms, governance reforms, and
the financial sector reforms. As we can see, India’s recovery from 2008 the financial crisis was manifold faster than the other countries. India is also
expected to grow at 1.9% during the current year against about 5% in the last
fiscal year and this is no consolation.
7.
Conclusion
This
Covid-19 pandemic has induced panic in the capital market which has forced the
market to enter into new lows, but considering previous similar occasions, the market is likely to pummel back to normal in a short span on 6 months to 1 year
and might yield superior returns to investors who are willing to invest in the
stock market. Therefore, it is advisable to invest in the stock market if
planning to hold for a long period or go for a buy low sell high approach because
the market usually tends to bounce back up after similar pandemics such as the
2008 financial crisis.
References:
Comments
Post a Comment