Most stock markets around the world crashed in 2020, due to Covid-19. India was not spared. After WHO classified Coronavirus as a potential pandemic on February 28, Nifty and Sensex plunged into their worst fall since 2009. Yes, Bank shares also fell due to bad loans. The fall and the effects of Covid-19 in the US and Europe brought the Indian economy to its knees, and the stock markets hit 25,981.24 points low. By March 23, the stock market had plunged 13.5%.
Stock Markets Booming
The global economy is hurting more and more, and with the second wave hitting the US, it seems the pandemic is not going away any time soon. Surprisingly, the stock markets are booming. The big concern, though, is whether the stock momentum will sustain. According to a study by the bestbrokerreviews.com on the FY22 projected earnings, the markets seem richly valued. According to Pankaj Pandey, from ICICI Securities, the peak of the market crash is behind us, and will not be affected by the rising Covid-positive cases and death rates. In other words, the stock markets are secure. While billions of people are losing money, those that have invested shares in company stocks are building wealth.
The US economy is projected to shrink by 6.1% in 2020, while India’s is poised to reduce by 3.2% in FY21. According to the World Bank, the world economy is going through its worst recession since September 2, 1945, at the end of World War II. Yet the stocks are doing just fine despite the grim reality, except the March deep fall.
Why the Trend, and How Likely is it to Sustain?
BSE and NSE, which are India’s top benchmark indices have recorded an over 40% gain since March 23. The increases in stock markets have been puzzling, but there are answers to that. The Reserve Bank of India announced an Rs 8 lakh crore liquidity injection in the financial markets. With so much liquidity and very places to invest, investors are channeling money towards companies shares that stock markets, explaining the rise.
As the bull run continues, some retail investors believe that the hurting economy is just a short-term, and once it bounces back, they may not be able to buy shares at the current level. Others believe that liquidity will push stock prices up once the Covid-19 is behind us.
Indian Shares, the Right Decision
A few months in and Covid-19 is wrecking the world’s economy. Over 200 countries are affected. As we look up to the only gleam of hope, a possible vaccine rollout in the early 2021, the number of cases continues to grow exponentially, and the death rate is soaring up. The stock markets are, however, not feeling the heat. So, if you are looking for a way to invest and overcome the economic depression digging its fangs deep into India, invest shares of a company’s stock through a brokerage.
We all want to conquer the pandemic. Governments are working with the private sectors to prevent a global depression. Wise investors grab any opportunity that presents itself. Investing shares in a company that trades stock is the smartest decision of the season—the best way to overcome depression if it indeed strikes.