How Recession Impacts the Indian Stock Market
India is a developing country that undergoes phases of economic growth as well as slowdowns. While the economy is scaling new heights, there are times when it enters a slow phase too. The most recent example of this is the COVID19 pandemic. While the pandemic had a global effect, it caused serious economic repercussions for India too. Talking about the Indian stock market, the onset of the pandemic led to a considerable crash. Both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) fell by 38%. This constituted a fall of 27.31% from the beginning of 2020. Besides a crisis or a pandemic, the Indian stock market is affected by a lot of external factors, both domestic and international. One such factor is the economic recession that has an adverse effect on the Indian stock market. Let’s understand how but before that, let’s get familiarised with the basics.
What is recession? Recession is defined as a slowdown in the economic activities of a country. This slowdown might last for two or more quarters and cause a fall in a country’s Gross Domestic Product (GDP). Besides the GDP, other economic indicators, like corporate profits, employment opportunities, and more, also suffer a decline.