Covid-19 and the Indian Stock Market Behaviour : Do Government Initiatives Really Matter?

Authors

  •   Sanjeeb Kumar Dey Assistant Professor in Commerce, Department of Commerce, Ravenshaw University, Cuttack - 753 003, Odisha
  •   Debabrata Sharma Faculty in Management, Department of MBA, Institute of Management and Information Technology, Cuttack - 753 008, Odisha

DOI:

https://doi.org/10.17010/ijrcm/2022/v9i1/170402

Keywords:

COVID-19

, stock market, BSE, NSE, impact assessment.

JEL Classification

, C3, D53, G1

Paper Submission Date

, October 20, 2021, Paper sent back for Revision, February 11, 2022, Paper Acceptance Date, February 25, 2022.

Abstract

The primary purpose of this study was to investigate the effect of the COVID-19 pandemic on the major Indian stock exchanges with specific regard to the government’s initiatives to control the same. The study covered a period of seven months, from February 2020 to August 2020, spanning three phases – infant, lockdown, and unlock phase – during the first wave of the COVID - 19 pandemic. The stock market indices at the closing time of the market were taken as the dependent variable, while the daily infection reported, the number of equity stocks traded, and the total turnover in the stock market were taken as independent variables. Using the data on daily reported COVID infections in India, the impact assessment was carried out with the help of a panel data regression analysis for the short-run and long-run in relation to the Government initiatives and control measures. During the infant phase, we found a strong negative relationship between daily reported COVID infections and stock market indices. Subsequently, even despite an increase in infections in the following phases, it was established that the stock markets responded positively due to the government’s proactive COVID -19 management initiatives.


Downloads

Download data is not yet available.

Downloads

Published

2022-06-23

How to Cite

Dey, S. K., & Sharma, D. (2022). Covid-19 and the Indian Stock Market Behaviour : Do Government Initiatives Really Matter?. Indian Journal of Research in Capital Markets, 9(1), 30–39. https://doi.org/10.17010/ijrcm/2022/v9i1/170402

Issue

Volume 9, Issue 1, January-March 2022

Section

Articles
Crossref
Scopus
Google Scholar
Europe PMC

References

Akhtaruzzaman, M., Boubaker, S., & Sensoy, A. (2021). Financial contagion during COVID–19 crisis. Finance Research Letters, 38, Article 101604. https://doi.org/10.1016/j.frl.2020.101604

Anh, D. L. T., & Gan, C. (2021). The impact of the COVID-19 lockdown on stock market performance: Evidence from Vietnam. Journal of Economic Studies, 48(4), 836–851. https://doi.org/10.1108/JES-06-2020-0312

Apergis, N., & Apergis, E. (2020). The role of Covid-19 for Chinese stock returns: Evidence from a GARCHX model. Asia-Pacific Journal of Accounting & Economics, 1–9. https://doi.org/10.1080/16081625.2020.1816185

Bhuvaneshwari, D., & Ramya, K. (2018). Can select macroeconomic variables explain long-run price movements of Indian stock indices? Indian Journal of Research in Capital Markets, 5(1), 35–53. https://doi.org/10.17010/IJRCM/2018/V5/I1/122907

Broadstock, D. C., & Zhang, D. (2019). Social-media and intraday stock returns: The pricing power of sentiment. Finance Research Letters, 30, 116–123. https://doi.org/10.1016/j.frl.2019.03.030

Cao, K. H., Li, Q., Liu, Y., & Woo, C.-K. (2021). Covid-19’s adverse effects on a stock market index. Applied Economics Letters, 28(14), 1157–1161. https://doi.org/10.1080/13504851.2020.1803481

Cepoi, C.-O. (2020). Asymmetric dependence between stock market returns and news during COVID19 financial turmoil. Finance Research Letters, 36, Article 101658. https://doi.org/10.1016/j.frl.2020.101658

Corbet, S., Hou, Y., Hu, Y., Lucey, B., & Oxley, L. (2021). Aye Corona! The contagion effects of being named Corona during the COVID-19 pandemic. Finance Research Letters, 38, Article 101591. https://doi.org/10.1016/j.frl.2020.101591

Das, A., & Megaravalli, A. V. (2017). Macroeconomic indicators and stock market boogie : The case of National Stock Exchange, India. Indian Journal of Research in Capital Markets, 4(3), 20–32. https://doi.org/10.17010/IJRCM/2017/V4/I3/118913

He, Q., Liu, J., Wang, S., & Yu, J. (2020). The impact of COVID-19 on stock markets. Economic and Political Studies, 8(3), 275–288. https://doi.org/10.1080/20954816.2020.1757570

Huo, X., & Qiu, Z. (2020). How does China’s stock market react to the announcement of the COVID-19 pandemic lockdown? Economic and Political Studies, 8(4), 436–461. https://doi.org/10.1080/20954816.2020.1780695

Jelilov, G., Iorember, P. T., Usman, O., & Yua, P. M. (2020). Testing the nexus between stock market returns and inflation in Nigeria: Does the effect of COVIDâ€19 pandemic matter? Journal of Public Affairs, 20(4), Article e2289. https://doi.org/10.1002/pa.2289

Kaur, H., & Singh, R. (2018). Impact of demonetization on the return of selected Indian banking stocks. Indian Journal of Research in Capital Markets, 5(2), 36–46. https://doi.org/10.17010//IJRCM/2018/V5/I2/130187

Liu, H., Wang, Y., He, D., & Wang, C. (2020). Short term response of Chinese stock markets to the outbreak of Covid-19. Applied Economics, 52(53), 5859–5872. https://doi.org/10.1080/00036846.2020.1776837

Mazur, M., Dang, M., & Vega, M. (2021). COVID-19 and the March 2020 stock market crash. Evidence from S&P1500. Finance Research Letters, 38, Article 101690. https://dthe oi.org/10.1016/j.frl.2020.101690

Mishra, A. K., Rath, B. N., & Dash, A. K. (2020). Does the Indian financial market nosedive because of Covid-19 outbreak, in comparison to after demonetisation and the GST? Emerging Markets Finance and Trade, 56(10), 2162–2180. https://doi.org/10.1080/1540496X.2020.1785425

Okorie, D. I., & Lin, B. (2021). Stock markets and the COVID-19 fractal contagion effects. Finance Research Letters, 38, Article 101640. https://doi.org/10.1016/j.frl.2020.101640

Ortmann, R., Pelster, M., & Wengerek, S. T. (2020). COVID-19 and investor behavior. Finance Research Letters, 37, Article 101717. https://doi.org/10.1016/j.frl.2020.101717

Phan, D. H. B., & Narayan, P. K. (2020). Country responses and the reaction of the stock market to COVID-19 – A preliminary exposition. Emerging Markets Finance and Trade, 56(10), 2138–2150. https://doi.org/10.1080/1540496X.2020.1784719

Qin, X., Huang, G., Shen, H., & Fu, M. (2020). COVID-19 pandemic and firm-level cash holding-Moderating effect of goodwill and goodwill impairment. Emerging Markets Finance and Trade, 56(10), 2243–2258. https://doi.org/10.1080/1540496X.2020.1785864

Sahoo, P., & Ashwani. (2020). COVID-19 and Indian economy: Impact on growth, manufacturing, trade and MSME sector. Global Business Review, 21(5), 1159–1183. https://doi.org/10.1177/0972150920945687

Salisu, A. A., & Vo, X. V. (2020). Predicting stock returns in the presence of COVID-19 pandemic: The role of health news. International Review of Financial Analysis, 71, Article 101546. https://doi.org/10.1016/j.irfa.2020.101546

Shi, Y., & Ho, K.-Y. (2021). News sentiment and states of stock return volatility: Evidence from long memory and discrete choice models. Finance Research Letters, 38, Article 101446. https://doi.org/10.1016/j.frl.2020.101446

Smales, L. A. (2014). News sentiment and the investor fear gauge. Finance Research Letters, 11(2), 122–130. https://doi.org/10.1016/j.frl.2013.07.003

Srivastava, H., Chauhan, S., & Singh, P. (2019). Impact of IIP & inflation on S&P BSE 500 listed companies : An analysis of Granger causality. Indian Journal of Research in Capital Markets, 6(3), 49–56. https://doi.org/10.17010/IJRCM/2019/V6/I3/148881

Thomas, T. C., Sankararaman, G., & Suresh, S. (2020). Impact of Covid-19 announcements on Nifty stocks. Journal of Critical Reviews, 7(13), 471–475.

Topcu, M., & Gulal, O. S. (2020). The impact of COVID-19 on emerging stock markets. Finance Research Letters, 36, Article 101691. https://doi.org/10.1016/j.frl.2020.101691

Veeravel, V., Karthikeyan, K., & Remiya, P. R. (2022). Is the Indian stock market affected by COVID-19? : Evidence from cases or fatalities. Indian Journal of Research in Capital Markets, 8(3), 52–61. https://doi.org/10.17010/IJRCM/2021/V8I3/167957

Waheed, R., Sarwar, S., Sarwar, S., & Khan, M. K. (2020). The impact of COVIDâ€19 on Karachi stock exchange: Quantileâ€onâ€quantile approach using secondary and predicted data. Journal of Public Affairs, 20(4), Article e2290. https://doi.org/10.1002/pa.2290

Yan, B., Stuart, L., Tu, A., & Zhang, T. (2020). Analysis of the effect of COVID-19 on the stock market and investing strategies. Available at SSRN. http://dx.doi.org/10.2139/ssrn.3563

Zhang, D., Hu, M., & Ji, Q. (2020). Financial markets under the global pandemic of COVID-19. Finance Research Letters, 36, Article 101528. https://doi.org/10.1016/j.frl.2020.101528