• Anshumi Maloo

JOURNEY OF VIRUS TO VACCINE, RECESSION TO REVIVAL


The outbreak and ongoing Covid-19 pandemic have shattered the entire world. The entire world is drowned in pain and grief due to this pandemic. The world has come to its knees reeling from the adverse impact of Covid-19. Everything is up in the air. There are decades where nothing happens and there are weeks where decades happen. The enormity and strangeness of this crisis is totally incomparable both in scale and experience to anything we have ever seen before in living memory.

The prevailing Covid-19 crisis is unprecedented and potentially devastating at multiple levels. It is a time to face some hard truth that it will remain with us until there is a vaccine or a cure. The best to face any crisis is to remain calm, cool and solution-oriented with a positive mindset.

The world economy has been crippled due to the domino effect of Covid-19 on all business sectors and rendering millions of people under the poverty line. The government has saved many lives by imposing a lockdown. With the lockdown lives and livelihood has been severely impacted, calling for immediate economic revival. The economy will take time to regain its mojo.


COVID-19 AND STOCK MARKET CRASH

The novel Covid-19 pandemic created widespread adverse effects on the working of the market. The stock market suffered badly to a great extent. The stockholders suffered erosion in their wealth to the extent of 70%.[1] The prices crashed and people started withdrawing their money invested in the scripts due to not knowing the demise period of the pandemic.

Due to gloom and doom, sentiments in the stock markets were completely spoiled, resulting in frequent crashes. The drastic downfall in all parts of the world market made people nervous to invest their money in the share market and consequently had adverse effects on socio-economic activity. S&P BSE Sensex which was 42,273 points on 20 January 2020 is 29,894 points on 08 April 2020.


HISTORY OF CRASH AND RECOVERY OF STOCK MARKET

It is worth noting that stock markets all over the world have a history of ups and downs, crash and recovery which are their salient features. India has not been an exception from this salient feature; it has faced crash and recovery several times, which would be clear by mentioning few crash and recovery cases faced by it such as the steep fall in stock markets in the year 1992 but recovered in 1.5 years. During the “Asian Crisis” (1996) Sensex dipped into 40 per cent in 4 years but recovered.[2] The current scenario of the market is that it has crashed around 30 per cent in less than three months.


RECOVERY IN THE CURRENT STOCK MARKET

It is a fundamental truth that things keep flowing. Nothing abides. The same rule applies to the stock market whatever goes up comes down and vice-versa. Market having suffered has the capacity to bounce back, the same thing happened in the Indian Stock Market but we should have the patience for its bounce back. Nothing happens rapidly and we shouldn’t feel panicky with its downtrend and we must wait for the opportunity to invest in securities.

The market exchange developments have never reflected an economic downturn or recovery. Stock markets are consistently modern in nature. In basic terms, this implies that the securities exchanges consistently crash at the lowest sign of monetary decline and locks on any certain supposition/news to move towards recovery. This is the thing that has occurred during the current bullish recovery in Indian, US and European stock markets.

Indian NSE crashed to 7500 levels on 23rd March 2020 on the sign of Covid-19 lockdown in the nation. It has truly been seen that organizations perform well during March, the last quarter of the Indian financial year. Subsequently, the business sectors realized that there were no crucial issues in the current securities exchange indices/prices and contacted its top during the early piece of the year.[3]


COVID-19 AND GOLD MARKET

It is an established truth that whenever any financial crisis rears up, Gold prices shoots up be it the current Covid-19 pandemic, the financial meltdown which occurred in 2008 or the 9/11 terrorist attack on the World Trade Centre (WTC) which took place in 2001 because it is considered as a safe-sure bet. People know that it can be converted into liquidity even at midnight. Therefore, investment in gold is a must because whenever in crisis we need liquidity to meet our urgent needs it can be a good ally.

Gold prices in the domestic market have shot up to 38% since the outbreak of Covid-19 spending outside of China. The Covid-19 pandemic has raised gold prices sharply at Rs 53,250 per 10 gram (excluding GST) as of 30 July 2020 which shows immense growth of 38% of the price of Rs 38,694 recorded in January 2020 two days before the Covid-19 case was reported outside China. The yellow metal price had soared by 13% within a year, the prices touched 55,000 per 10 grams (including GST) during the day and settled at 54,900 per 10 grams.

In 2008, while filing for bankruptcy by the Lehman Brothers and the Global financial meltdown, the gold prices sharply rose from Rs 12,590 to Rs 17,008, a year later showed an increase of 36% in a year.

Gold has always been a safe bet for investors wherever there is a great economic crisis for all three aspects: historical, psychological and cultural reasons. The only exception to the gold prices will be the period of demonetization which took place in 2016, when the prices declined by 2% on a yearly basis.[4]

It is not yet clear how will this pandemic come to an end till there is any cure or by the availability of the vaccine it is said that the prices of Gold will fluctuate for a year. In the prevailing uncertainties, gold investment is strongly recommended to meet over future prospects, since for any tension between the countries its prices will always go up.

The recession of Coronavirus was very deep but also very short. Gold performed much better as compared to other assets. More than a financial crisis corona virus was more of a natural disaster that was stimulated by other fundamental factors. During the time of March, the panic was so great that the investors were even ready to sell their treasuries but now the moving rate is a little slow but can fluctuate if there is a second wave of Coronavirus, then the prices of gold can rally up again.

Like gold, another asset that is viewed as more secure to put resources into during emergencies is government bonds, given that governments (for the most part) don't fail a lot to reimburse their obligations. At the point when speculators are apprehensive about future economic possibilities, they purchase government bonds, this at that point makes these bonds more costly and lessens the yield that they pay (government bonds pay a fixed money premium installments).

The yield on bonds is additionally influenced by money related arrangements worked by the national bank, with lower financing costs set in more fragile economic atmospheres to urge individuals to spend.


COVID-19 AND OIL MARKET

As the lethal virus started expanding and thus destroying the global economy. The oil industry became one of the casualties, by drastically bringing down its demand and prices. Which happened due to the appearance of Corona in December 2019 the prices dropped from $61.06 to $23.06 on 23 March 2020.[5] This had an adverse impact on the production of oil. Several nations that were engaged in manufacturing oils had to cut down their production due to a decline in demand.

Due to the life-threatening Covid-19 pandemic which forced partial or complete lockdown which resulted in people abandoning their travel plans. This resulted in grounding International flights which resulted in reducing Aviation Turbine Fuel (ATF) consumption. This had an adverse impact on the production of oil across the globe. International travel has been affected adversely for a long period of time because the virus has been spread into 175 countries.[6]

During the complete lockdown period, it has restricted all forms of mobility therefore the consumption of oil has declined at a higher pace. Further, commercial and industrial activities have also reduced the consumption of oil.

Since January, the world has been running down its supply of raw materials, intermediates and finished materials, expanding delivery times and leaving stock levels at basically low levels. With so much worldwide modern limit running under standard at the present time and business levels do not back up to original capacity, the concern is that economic recovery could hit supply-side imperatives sooner rather than later, trading off longer-term recovery possibilities.

Covid-19 has impacted the price and trade of crude oil to a greater extent which has created distress among the investors in the upstream sectors. Looking at the crisis oil industry is at a great risk sooner or later the countries exporting oil will go bankrupt. For, oil industry to survive in this pandemic would need adequate support from the respective governments in their nation. On the other hand, for a short- period of time, the oil industries can survive using their cash reserves to sail through. For the importing nations it is a great deal to buy oil at a low price but for the exporting nations to survive will be a great challenge.

Countries across the world declared lockdowns. In India, the primary lockdown was imposed on March 25. The lockdown severely affected the first quarter of the Financial Year 2020-21, and it was extended that India will perform ineffectively in April-June and July-September quarters because of a drop in assembling and administration exercises. Be that as it may, what followed was totally ironical as Indian stock markets saw a rise of some percent in the expectation of a vaccine for Covid-19 which can bring this pandemic to an end.

The Covid-19 had a devastating effect on the country's economy making the year 2020 a year of survival and the year 2021 for growth, revival and development. To regain what we lost in 2020 we shall have to plan for development and growth. Hence, we shall have to work hard in this direction whatever needs to be done should be done by vision and wisdom. India should now ascend from this calamity. The 14-week suspension of activities has influenced various areas and locales in an unexpected way; However, most associations face huge difficulties to recover financial force. The significance of a well-planned inorganic-development system has never been more prominent. It is worth mentioning that the stock market is a barometer of a country's growth, progress and prosperity.

Administrative endorsements may take longer, and more lead time will be expected to close financing. We by and by solidly accept that the chance to return to M&A procedure has come. It is much better for organizations to organize expected subjects and activities furthermore, to start discussions proactively than to pause furthermore, respond or, more awful, to lose their previous positions to imaginative advanced investors.

It is a fundamental law that if there are problems there are delightful events occurring each moment. Both problems are solutions that are joined together like the peak and valley. We have to remember that we should not be disheartened by the problems but we have to face them courageously. There is no problem that defies its solution.

It is heartening to know that the viable solutions to meet Covid-19 impact various nations have been making sincere efforts to develop the vaccine for its treatment and many nations who have been engaged in this direction have been successful in developing an effective line of treatment for their citizens.

Ralph Waldo Emerson has well said, “The trade and business are like a plant which always grows where ever there is peace.” This will well suit when the fear of Covid-19 will disappear.

[1] Article by Abhishek Raja ‘ram’- COVID-19 19 Impact on Stock market, April 21, 2020 [https://www.outlookindia.com/outlookmoney/equity/covid-19-impact-on-stock-market-4666].

[2] Article by Abhishek Raja ‘ram’- Covid-19 Impact on Stock market, April 21, 2020 [https://www.outlookindia.com/outlookmoney/equity/covid-19-impact-on-stock-market-4666].

[3] Article by S Ravi- Impact of Covid-19 on the Indian Stock Markets on May 11, 2020, BW Business world. http://www.businessworld.in/article/Impact-Of-COVID-19-On-The-Indian-Stock-Markets/11-05-2020-191755.

[4]Article by Niyati Parikh- Why Covid-19 has been the best crisis for Gold on August 15, 2020, Times of India. [https://timesofindia.indiatimes.com/india/why-covid-19-has-been-the-best-crisis-for-gold/articleshow/.].

[5] Article by Sanjay Kumar Kar- Will the oil industry survive Covid-19 effects? on March 28, 2020, Energyworld.com. [https://energy.economictimes.indiatimes.com/energy-speak/will-the-oil-industry-survive-covid-19-effects/4125].

[6] Article by Sanjay Kumar Kar- Will the oil industry survive Covid-19 effects? on March 28, 2020, Energyworld.com [https://energy.economictimes.indiatimes.com/energy-speak/will-the-oil-industry-survive-covid-19-effects/4125].

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