Covid-19 & Market Investments

Great depression

The Great Depression started in the United States. After a major fall in stock prices that began around September 4, 1929. And became worldwide news with the Stock market crash of October 29, 1929.

Between 1929 and 1932, worldwide GDP fell by an estimated 15%. The effects of the Depression lasted until World war II.

The Great Depression had affected not only the poor countries affected rich countries’.

Personal income, tax, profit, and the price dropped, while international trade also fell more than 50%. Unemployment int he U.S increased to 23% and some other countries increased as high as 33%.

Corona Effect on Economy

The world has suddenly changed in the last two months. As a result of coronavirus. The Chinese market went down. Other markets started to distance themselves from the problem.

WHO declared coronavirus as a pandemic. Followed by various countries that started to announce the lockdown, travel bans and other restrictions. Capital markets across the world dropped after lockdown.

Within Form 24 February within 20 trading days, the Sensex has reduced nearly 15,000 points. Small and new investors who started four-figure mutual funds about two to three years back are in shock.

In the 2019 market hit an all-time high level. these new investors saw their SIPs in extraordinary return.

The market fall due to corona is serious. The markets are worried due to a lack of clarity on the sudden dropdown.

As a result It will get clear only after the corona situation comes under control. After this lockdown gets over the market will change in the drastic phase.

Investment strategy

While in this phase the inverters should prepare for the long wait and interest their money. They can follow ‘buy on dip’ refers to purchasing an asset after it has declined in price. ‘

Therefore, they are buying when the price drops in order to profit from a potential future price rise. Investors should stay within the discipline of their asset allocation and use the market falls for portfolio rebalancing.

The Government has constituted a task force to reduce the economic difficulties arising out of the pandemic.

This is a positive move and could bring relief to the stressed segments of the economy. However, urgent steps are also needed to improve investor confidence.

Oil Industry

Crude oil war between Saudi Arabia and Russia is another problem. Now the commodities and currency market are in a state of great disturbance due to the crude oil war.

After is crude oil war however the market won’t come to normal soon. Better to wait for calm before taking big investment.

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