How Covid revolutionised the Indian stockmarket

Impact of Covid-19 on the Indian Stock market
So to know what was the impact of Covid-19 on the Indian Market you need to first know how was it before the pandemic started. Pre Covid-19 situation was such that the market capitalization on major exchange was about 2.16 Trillion USD in India. Moreover, the stock market rally in 2019 was limited to some 8 to 10 stocks that were within the large-cap. The Sensex excluding dividends returned around 14% in the year 2019 with highly featuring blue-chip companies like HDFC, TCS, Infosys, ICICI Bank, Hindustan Unilever, HDFC Bank, etc without whom the returns of Sensex would have been negative.
At the beginning of the year 2020 the overall recovery, that caused both BSE and NSE to trade at the highest levels ever. It reached a peak of 42,273 and 12,362 respectively. At the start of 2020, there were about 30 companies lined up who were expected to file IPOs. The market conditions were very favorable as they witnessed record highs in mid-January. Everything seemed better than perfect.
Since the Covid-19 struck in India the markets are under constant fear and uncertainty prevails. The markets all around the world crash to levels that were not witnessed since the 2008 Global Financial crisis. The BSE and Nifty 50 followed the strong correlation of trends and indices of the global market and they fell by 38%. The market capital lost in total was 27.31% at the start of the year. The sentiments of people regarding the pandemic were clearly visible in the market upon investors that included foreign and domestic ones.
The layoffs have been multiplied since and companies have scaled back. Other than that employee compensations have been worse affected that results in negligible growth in the last couple of months. Sectors like hospitality, tourism, entertainment, etc have been impacted in a worse manner and the stocks of these companies have been fallen more than 40%. There were many financial crises that have been witnessed by people in the past also including the global recession of 2008. But this coronavirus crisis was different and unique from the past fallouts.
In consideration of the current turmoil, RBI and Govt of India have come up with some solutions such as reduction of repo rate, extending moratorium as regulatory relaxation, and many other measures to boost the liquidity in the system. However, the pandemic has adversely impacted the corporate sector. Rising cases of bad loans, subdued loan growth, payment deferrals have made the growth and health of economic activity impaired.
The fall of household income, marketing spends, hiring freeze, and reduced travel was led due to the deceleration of GDP growth and cut in CAPEX and Discretionary expenses. The growth and momentum would be revived by innovative products, technology-driven processes, and a healthy balance sheet, post lockdown. When the pandemic will be over, the lowering of oil prices and high capital expenditure will provide a flourishing platform to make everything back to normal.
The drop in the BSE Sensitive Index is just a temporary thing. Each dip that occurs provides a great opportunity to the investors with the opportunity to enter the market and earn abnormal returns, especially for a long-term horizon.

Indian stock market’s reaction to Covid-19 crises
Indian’s Covid-19 crisis has failed to spark a very deep stock selloff which was seen the last year. Pointing of less stringent curbs by some asset managers is the reason for now. When the nation reported 300,000+ and 4000+ deaths a day, the index was moving in line with the regional peers. Additionally, the S&P BSE Sensex index has a fall of 6.6% from the mid-Feb peak. That can be compared to the 23% tumble in the Sensex last March when the pandemic started.
The muted reaction of the stock market to the virus was surprising which can also be seen in net outflows of foreign investors. More limited and measures of regional lockdown that are been implemented by the state governments have prevented the landslide of economic activity. There is a constant fear of the escalation of restrictions as there are chances of a rapid outbreak in the future. The steep fall in the stocks will provide investors with the opportunity to allocate more funds to asset classes. Now the market will not have a drastic impact on Covid-19 as it had in the initiation. As the companies are better equipped and know what to do in order to continue operating.
Benchmark government bond yields have eased up about 11 basis points in the recent months after the announcement of RBI’s quantitive easing in April.
Indian Shares are in line with global peers, despite small stumbles the market is on a bullish trajectory overall. In last year the average correlation between India’s Nifty 500 and S&&P 500 rose to the high levels of 85%. In comparison with 70% correlation over a long term according to Bloomberg analyst.
As Manish Kumar, CIO at ICICI Prudential said “The market is currently supported by global sentiments and liquidity” And surge in covid-19 is supporting Indian markets which are contrary to most developed nations.

Conclusion
To sum it up, covid-19 did a lot of damage to the stock market initially. But as the market is healing and learning further escalation in the situation won't be having a major impact as it had at the initiation of the pandemic. Everyone is well equipped and has knowledge on what to do next in order to protect the economy and markets. When the pandemic will be over, the lowering of oil prices and high capital expenditure will provide a flourishing platform to make everything back to normal. The drop in the BSE Sensitive Index is just a temporary thing. Each dip that occurs provides a great opportunity to the investors with the opportunity to enter the market and earn abnormal returns, especially for a long-term horizon.