Stock Market 2020: Viral Journey from Bear to Bull Market

By: Jay Patel | 4 January, 2021

COVID-19, the infectious virus created ruckus across the globe as authorities enforced strict lockdowns initially due to the unknown nature of the deadly Coronavirus. Government of India also implemented the world’s toughest lockdown in late March. Stock markets started crashing in February 2020 and experts started pouring the opinions about economies and stock markets.

Everyone started talking about NIFTY 50 reaching levels of 6,000 or below by end of 2020 as the lockdowns caused severe impacts on supply chains, sales of companies, lifestyle, consumption, etc. The following table shows how markets reacted when it was just starting of lockdowns and COVID 19 cases.

Country	Index	01-Jan-20	Bottom for 2020	% Drop	Date
India	Nifty 50	12,182.00	7,610.00	-37.53%	23-Mar-20
USA	S&P 500	3,257.85	2,237.40	-31.32%	23-Mar-20
France	CAC 40	6,041.50	3,754.84	-37.85%	18-Mar-20
Japan	Nikkei 225	23,204.86	16,552.83	-28.67%	19-Mar-20

 

The markets dropped in the range of 25% to 40% within the first 3 months of 2020 amid fears of quickly rising cases, job losses, and predictions of GDP losses. World Bank, IMF, and other topmost institutions released their papers and most of them concluded that the recovery will depend on the vaccine development and will take at least a year or two. Same predictions were made for the stock markets but the following table shows the reality:

Country	Index	Levels	% Upside from Low
India	Nifty 50	13,981.75	83.73%
USA	S&P 500	3,756.07	67.88%
France	CAC 40	5,551.41	47.85%
Japan	Nikkei 225	27,444.17	65.80%

 

NIFTY 50 has recovered all its losses of the year and it is at an all-time high.  Nikkei 225 reached 27,000 level first time after 30 years. When we look back at pre-COVID times, the Indian GDP growth was constantly declining and there were other geopolitical issues on the table for investors to look into before making any bets on markets like Brexit and US-China Trade war.

However, the monsoon for the year 2019 and 2020 was good and which helped the rural demand to recover quickly. The green shoots in the IT and service sector is justifiable as the companies saved a lot on office rents, skipped bonuses and hikes for employees citing the uncertain business future. Sectors like Realty, Hospitality, and Banking still have clouds on their head. The global supply chain is still disrupted and last month there was a huge container shortage and the freights were almost 70% to 100% up.    

Markets started rallying up on positive news of COVID medications, Vaccine developments and many countries started authorizing emergency use of vaccines which was unexpected back in March 2020. As we enter 2021, Nifty touched 14,000 levels and many of us have experienced FOMO (Fear of Missing Out). Since investors cannot go back to the past but we surely can take advantage of future earning opportunities.

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