What is Coronavirus?
Coronavirus or (COVID-19) is a family of viruses that cause illness ranging from the common cold to more severe diseases. They are newly identified which has not been previously seen in humans. The increasing number of coronavirus cases has not just affected people and their travelling but also has put pressure on businesses and supply chain around the world. This is because there is no such cure for this virus as of now so certain Do’s and Don’ts prescribed are must for prevention.
It’s effect on the stock market.
Investors currently fear recession because of coronavirus outbreak as corporate profits are decreasing every day and so many markets are facing slowdown lately. Analyst predicted that majority companies won’t see a profit growth this year majorly because of decline in Chinese economic activity eventually effecting supply chain and economies of other countries.
Market may have to for see the worst week after the financial crisis of 2008, with other economic indicators flashing warning signs.Shares of Microsoft, the most valuable company in the United States, fell 7 percent as its sales currently declining because of the outbreak’s effect on its supply chain. Now if factories are closed and consumers are not ready to step out and take risk even the lower interest rates by banks won’t help in anticipation of them spending more.
Market capitalization of BSE-listed firms declined to Rs.146.87 lakh crore on Friday against Rs 158.71 lakh crore on February 19, 2020.This kind of decline comes from a fact that none of the stock in Sensex pack gave a positive return to investors during Feb 19-28, 2020.Shares of the ONGC declined the most (12 per cent) during the period. Reliance Industries, Maruti Suzuki, Hero MotoCorp, Mahindra & Mahindra, HCL Technologies and ICICI Bank also declined over 5 per cent.
Since India shares a considerable share of capital and intermediate goods from China, the industrial slowdown in China is most likely to impact the domestic production and consumption in India. The ongoing decline in the stock market is a global decline. It is a risk off market right now, which is why gold prices have also surged in the recent past. The reason being increase in the prices of gold is people are scared to invest their money in the stock market, so they are pulling their money back and have started investing in gold due to which you can see there is increase in demand for gold due to which the price of gold is increasing.
Here below is the graph showing how the stock market is been affected by coronovirus.
Global market is in panic mode with the spread of coronavirus. Till the market doesn’t see any relief from the virus, we may see sideways to negative movement going forward.
