3. ABSTRACT
The capital market is the heart of the economic position of a country. Stock
market plays a crucial role in the growth of business and trade of a nation
which influences the economy. The investor who is having additional money
could invest in securities or in some other resources like gold, land or could
just remit in his/her bank account. At present, a wide assortment of investment
options is available like National Reserve Funds Endorsements, Indira Vikas
Patra, Kisan Vikas Patra, Mutual Funds, Insurance Plans, Chits, Company
Shares, Bank Fixed Deposits, Company Fixed Deposits, Provident Fund,
Bonds/Debentures, Postal Investment Funds Plans, Government Securities,
and Real Estate and others to the investors to suit their requirements and
nature. The decision of the investor is based on the degree of return and the
risk.
4. 1. WAR : War is the most critical issue that leads to a market crash. Whenever countries go on WAR, the
faith in those countries decreases. War is very expensive to continue, so the government of the country
in war starts to deviate resources from all sectors to the only defense sector.
2. TERRORISM : Terrorism is a global issue now. The World Trade Center crash in America led to this
crash worldwide. So if there is any terrorism threat, it creates panic, and the stock market can crash.
Several intelligence reports are available suggesting that terrorists plan to attack stock exchanges so
that there is a crash and the whole economy of that country suffers.
3. DISEASE PANDEMIC :The outbreak of a Global Pandemic such as the Corona Virus (Covid-19) that
spreads much faster than anticipated causes uncertainties in the investor market as countries take
measures to prevent this disease from spreading further. Such a pandemic causes fear and distrust
leading to stock market crashes.
4. SCAMS : There have been crashes in stock markets due to scams several times. Scams lower the
confidence that investors have in the economy. It creates a tremendous negative impact and can lead to
crashes that may take several months to recover.
Causes of Stock Market Crash
5. ANALYSING AND DISCUSSING
• Ever since Covid-19 strike, markets have been under fear as uncertainty reveals. Global capital markets have
witnessed the financial crisis of 2008 and US & European countries announced bailouts packages to recover the
economic growth. It’s noticed that there is a strong correlation with the market trends and index of the global markets
as BSE and Nifty fell 39% in the global crises period.
• With India seeing a massive surge in Covid cases, the emerging online stock market is struggling to make headway.
According to the country’s top-performing fund manager, the Corona impact on the stock market, and by extension its
impact upon the economy is being underestimated. The Covid19 impact on the stock market is deadly, as it may
cause a “correction” in stocks.
Stock Market Volatility due to Covid-19
India’s Stock Market is experiencing a major increase in its volatility for the period 2020 – 2021. The markets have
raised by about three times their usual time period, and have been halted twice in March 2020 due to a lower circuit
breaker.
India’s Stock Market is experiencing a major increase in its volatility for the period 2020 – 2021. The markets have
raised by about three times their usual time period, and have been halted twice in March 2020 due to a lower circuit
breaker.
6.
7. Effects of the lockdown due to Covid-19 on Economic Growth
Losses from organized sectors in late March 2021 amounted to an estimated nine trillion rupees,
which was expected to rise as the lockdown continued and losses increased to 12.05 trillion.
Depending on the market scenarios, segments like consumer retail sectors have seen sharp falls
ranging from 3 to 23 percent. Similarly, the FMCG sector increased to 11 to 23 percent (Business
Today in).
Some industries such as Infrastructure,
Tourism, and Entertainment have been
adversely affected and stocks of these
companies have fallen by 30 to 35%.
8. CONCLUSION
Stock Market crashes are rare but should be prevented. Faith in the economy is dependent
on the proper functioning of the Stock Markets. Therefore, the government should be very
careful and take proper measures to prevent such crashes.
9. RECOMMENDATIONS
If there were a set formula by which market crashes could have been prevented, there would have
been no crashes. But there are still a few signals by which you can predict a crash.
1. If a country’s index reaches an all-time high and doesn’t stop there and keep increasing, then
there are chances that it will crash. A market can’t keep increasing without correction. The market
will always grow at a steady rate, not at an exponential rate.
2. The government shouldn’t indulge in wars with other countries as it impacts the market.
3. Strong monitoring should be placed by the government to prevent scams.
10. IMPLEMENTATION
Invest in high-quality assets : High quality assets are investments that are poised to
deliver slow and steady growth over long periods of time.
Clean up your finances : You can also hedge against a future market crash by tidying
up your finances. Pay down high-rate debt and cut out unnecessary expenses. You'll
lower your cost of living, which reduces your income needs now and in retirement.
Systematic Investment Plans (SIPs) : Sticking to one’s systematic investment
plan during the Covid19 crisis can be of great help. Avoid taking big or hasty decisions,
owing to the fact that the pandemic time is uncertain.
