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

Yashraj Varma, Renuka Venkataramani, Parthajit Kayal and Moinak Maiti
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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

JRFM, 2021, vol. 14, issue 11, 1-15

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.

Keywords: crisis; NIFTY50; COVID-19; sustainable; event studies; India; risk; investment (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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