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  • Nair Ventures

Indian Equity Markets are on a Rally!

The Coronavirus was first noticed in the Wuhan province of China in December of 2019 and has since spread to almost every country in the world. The situation was then declared a pandemic by World Health Organisation (WHO) in March of 2020. The pandemic resulted in widespread lockdowns and restrictions across the world. Due to the lockdown many firms and local businesses were forced to halt their operations and suffered majorly owing to the lack of revenue.

The halt in business operations was reflected in the stock markets as well and the primary stock indexes like the Dow Jones Industrial Average, Nasdaq Composite, Sensex, Nikkei, FTSE100, etc tanked by more than 20% in March.

This drop ended the longest ever bull market in the US.

The primary Indian equity indices – Nifty50 and S&P BSE Sensex dropped by around 25% each to 8,200 and 28,000 respectively. It was considered as one of the biggest drops since the financial crisis of 2008. This period also recorded the highest ever selling by foreign institutional investors. The extension of the lockdown and the GDP downgrade of the country was expected to cause a bigger drop in the equity markets, but that hasn’t been the case for equity markets in India.

Since the sudden drop in value of the equity markets in March, the Indian equity indices returned back to pre-covid levels in just 4 months. Nifty and Sensex ended the first quarter of 2020 with a gain of around 30% from the previous lows in March.