A look at post-lockdown performance of the Indian stock market

In 1967, an incident occurred that no one could have predicted. It is believed that prior to this incident, it was a well-established fact that all swans are white. But the sighting of black swans in Western Australia by Dutch explorers in 1967 completely quashed the validity of this fact. The significance of this unpredictable event led to the coining of a new term, the ‘Black Swan Event’. This newly coined term referred to events that go down in the history books as being absolutely unpredictable.

COVID-19 and its impact on the stock market have hence often been referred to as a ‘Black Swan Event’ by many trading gurus around the globe. The aftermath of this unpredictable pandemic took everyone by surprise and led to disrupting the daily lives of many. As a result, stock markets across the globe took a plunge with the implementation of lockdowns to curb the spread of COVID-19.

In tandem with many global markets, the COVID-19 inflicted lockdown has had its effects on the Indian stock market too. Despite infusing volatility in the stock market, the lockdown has not been able to detract investors.

It has come as a surprise to many that as a result of the lockdown imposed due to COVID-19 many millennials have decided to enter and invest in the Indian stock market. This increased interest among millennials does seem to be some sort of a ripple effect of the lockdown caused job losses, pay cuts and work from home situation. Digitisation has made the entire entry process easier for millennials. It has attracted them to save and invest in the stock market, all from the comfort of their homes.

Given below is the indexed data that registers closing stock indexes of NSE Nifty 50 in January, April and June 2020. It needs to be noted that the performance of the Indian stock market was impressive in Jan’20. This is before the effects of the COVID-19 virus had reached India. The downfall was triggered only after the announcement of a nationwide lockdown at the end of March’20.

The following month, in April’20, the Indian stock market took a complete nosedive. With the nation entering a complete lockdown for approximately 3 months, economic activities across industries started taking a hit. It was not until June 2020 that any signs of possible recovery became evident. The plummeting stopped and benchmark indices started to recover as soon as restrictions started easing.

A few months down the line, the recovery was beyond expectations. With the pandemic still raging, the BSE Sensex first hit an all-time high of 42,597.43 in November 2020. Concurrently, the National Stock Exchange’s NIFTY 50 rose 197 points, or 1.6%, to close at 12,461 points, also an all-time high.

Then soon enough, in December 2020, the BSE Sensex and Nifty 50 registered new all-time highs again. This time, the BSE Sensex touched an all-time high of 45,033.19 points and National Stock Exchange’s NIFTY 50 registered a new all-time high of 13,250.30 points.

Now let’s fast forward another month down the line, into the new/current year. The growth continued

to stretch beyond expectations in January 2021. The BSE Sensex index, which crashed to a four-year low of 25,981 points in March 2020, surged to an all-time high of 50,181 points. Similarly, Nifty too marked a gain from its March 2020 low of 7,610 points and hit an all-time high of 14,244 points.

Lastly, let’s talk about the previous month. Monday, 15 February 2021 witnessed the latest all-time high with BSE Sensex closed at 52,154.13 points and Nifty 50 reached 15,314.70 points. All this data makes it pretty evident that the growth has been solid, consistent and reliable.

Economic reforms, moratorium grants and stimulus packages have certainly helped revive the stock market from the downslide that occurred when lockdown was announced. Another noteworthy aspect is the newly devised strategy to reduce imports and increase self-sufficiency that seems to be paying off well.

Any contemporary dips in such a potent market situation are to be seen as potential profit-making opportunities for investors. In such times, hiring professional advisory can help investors achieve their targeted return goals with enhanced accuracy. More so, if you are a millennial who has just entered into the world of trading recently. Keep in mind though, there are many seasoned traders too who hire professional advisors to give themselves an added advantage in the trade.

To sum it up, regardless of your experience in trading, hiring a professional advisor is an investment that often does more good to your pocket than expected for what it costs.

(The writer is Chief Strategy and Digital Transformation Officer, Marwadi Shares and Finance Ltd. Views expressed are personal)