DISCONNECT BETWEEN STOCK MARKET AND INDIAN ECONOMY DURING COVID 19

Abstract

With the coming of coronavirus pandemic in the country, nationwide lockdown was imposed which became the reason of suffering for many people as well as the economy. The mental health of people started deteriorating. The pandemic stress led to loss for a lot of people of India. Many people were led off from their jobs. The unemployment rate was all time high due to the coronavirus and nationwide lockdown. The economy performed poorly and the growth rate went -8% which was the lowest in a decade. The government also took a lot of steps in order to save the economy but still the economy was badly impacted. But this pandemic proved to be a blessing for the investors as the Indian stock market went all time high with the help of global financing. With the announcement of lockdown, the market started falling down and was at its lowest with the onset of the lockdown. But soon the foreign investments started coming in and small retail investors also started showing their confidence in the market which resulted in the boom in the market. Market became bullish and the investors were able to made a lot of profits because of this behaviour of the market. The sensex and nifty touched their all time high during this time. This pandemic showed a disconnect between the Indian economy and the Indian stock market and gave a lesson that all the bad events may not result in a downfall in the market. The pandemic was a proof that it is possible for the market to rise even after a downfall in the economy. The development of the Indian stock market from 2019 to 2020 was examined, and it is studied that why the stock market is still growing in the face of the Indian economic slowdown. Nifty and Sensex are growing, and the reason for the abnormality is because investors are in a leading position. They only want to invest in large companies during the economic downturn. As a result, these values have become very expensive, so the prices of Sensex and Nifty have risen. The paper studies the effect of various factors on the economy and the impact of the coronavirus on the Indian economy and the Indian stock market. It also talks about the disease i.e. what it is about, where did it originate from and who are severely impacted. The paper also shows the efforts which were put in by the government before the entry of coronavirus in India and how the government was able to cope up with the pandemic. The studies also shows the comparison between the Indian stock market and the markets of some

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other Asian nations to throw some light on the exceptional performance of the Indian stock market in the time of pandemic. The paper shows the performance of Sensex and Nifty in 2020 and it also talks about the GDP of India in 2020 both quarterly and annually. It also showed that there can be n number of reasons for the downfall of the economy and the exceptional performance of the Stock markets and it also proves that it is wrong to believe that both of them are positively correlated. Hence the paper throws the light on the disconnect between the Indian economy and the Indian stock markets.