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Short-Term Impact of COVID-19 on Indian Stock Market

Author

Listed:
  • Yashraj Varma

    (Madras School of Economics (MSE), Gandhi Mandapam Road, Kottur, Chennai 600025, India)

  • Renuka Venkataramani

    (Madras School of Economics (MSE), Gandhi Mandapam Road, Kottur, Chennai 600025, India)

  • Parthajit Kayal

    (Madras School of Economics (MSE), Gandhi Mandapam Road, Kottur, Chennai 600025, India)

  • Moinak Maiti

    (Department of Finance, St. Petersburg School of Economics and Management, National Research University Higher School of Economics, Kantemirovskaya St. 3A, 194100 Saint Petersburg, Russia)

Abstract

The onset of the COVID-19 pandemic and lockdown announcements by governments have created uncertainty in business operations globally. For the first time, a health shock has impacted the stock markets forcefully. India, one of the major emerging markets, has witnessed a massive fall of around 40% in its major stock indices’ value. Therefore, we examined the short-term impact of the pandemic on the Indian stock market’s major index (NIFTY50) and its constituent sectors. For our analysis, we used three different models (constant return model, market model, and market-adjusted model) of event study methodology. Our results are heterogeneous and largely depend on the sectors. All the sectors were impacted temporarily, yet the financial sector faced the worst. Sectors like pharma, consumer goods, and IT had positive or limited impacts. We discuss the potential explanations for the same. These results may be useful for investors in safeguarding equity portfolios from unforeseen shocks and making better investment decisions to avoid large, unexpected losses.

Suggested Citation

  • Yashraj Varma & Renuka Venkataramani & Parthajit Kayal & Moinak Maiti, 2021. "Short-Term Impact of COVID-19 on Indian Stock Market," JRFM, MDPI, vol. 14(11), pages 1-15, November.
    • Handle: RePEc:gam:jjrfmx:v:14:y:2021:i:11:p:558-:d:681758
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    References listed on IDEAS

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    1. Koushik Mandal & Radhika Prosad Datta, 2022. "Analysing Time-frequency Relationship between Oil price and Sectoral Indices in India using Wavelet Techniques," International Journal of Energy Economics and Policy, Econjournals, vol. 12(5), pages 192-201, September.
    2. Janani Sri S. & Parthajit Kayal & G. Balasubramanian, 2022. "Can Equity be Safe-haven for Investment?," Journal of Emerging Market Finance, Institute for Financial Management and Research, vol. 21(1), pages 32-63, March.

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    More about this item

    Keywords

    crisis; NIFTY50; COVID-19; sustainable; event studies; India; risk; investment;
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