The Bubble, the Recession and the Bull Phase : 2020, A Year of Unprecedented Indian Stock Market Movements

Abstract

The Indian stock markets are witnessing a year that is completely filled with bewilderment. In the beginning of the year, Indian stock markets saw its maximum and then within a few months, as Covid 19 pandemic distended and the Indian economy shut down for the first time in history as did all the economies around the world; it swiftly tumbled down shifting towards its lowest in no time. However, at the moment the stock markets are mounting up once again, making record highs. The objective of this paper is to study the reasons behind the steep fall in the stock markets in India after the Pandemic outbreak, and the factors responsible for the current ascendant trend. We will also study the effect of creeping recession, as the economic activities came to a standstill due to the lockdown in the economy, on the current stock market trends. We conclude that there is always a relationship between the GDP rate and the stock market movements. Also from the analysis it is apparent that in the short run there may be a disconnection between the two, however in the long run there is always a positive correlation between GDP growth and the stock market movement.