Indian equity market led by Nifty and Sensex is underperforming compared to most of its global peers in the 2020 bear market as the world is fighting the Novel Coronavirus pandemic.
Nifty is down 33.78% on closing basis in the last three months.In fact India is doing well in controlling coronavirus pandemic and India’s efforts were louded by most in the world when Prime minister Narendra modi announced 21 days lock-down.
OXFORD COVID-19 GOVERNMENT RESPONSE TRACKER measure variation in governments’ responses for tackling coronavirus with COVID-19 Government Response Stringency Index (Stringency Index). This composite measure is a simple additive score of the seven indicators (S1-S7) measured on an ordinal scale, rescaled to vary from 0 to 100.
India is ranked near top with a score just below 100.
In Spite of adequate and hard sought measures by Indian government to control Coronavirus, Its major indices have witnessed significant correction in the last few months along with the global peers. Most of the major indices in the world are trading in bear territory.
Surprisingly , Indian market is underperforming the rest of the world if we compare it with Dow Jones, Dax, FTSE and Nikkei.
In addition to corona virus crisis,India is facing its own financial crisis cause scandals/ fraud at its reputed lenders or institutes eg. Yes Bank, DHFL, PMC bank, IL & FS.
Several rating agencies have recently warned on slowing Indian economy and have cut growth forecasts which may add further to our current woos of the stock market.
According to Fitch Ratings, India may post a two-per cent GDP growth in 2020-21, the slowest since the economy was liberalised 30 years ago.
The Asian Development Bank (ADB) sees India’s economic growth slipping to four per cent in the current fiscal (April, 2020 to March, 2021), while S&P Global Ratings last week further slashed its GDP growth forecast for the country to 3.5 per cent from a previous downgrade of 5.2 per cent.
Moody’s Investors Service has also slashed its estimate of India’s GDP growth during the 2020 calendar year to 2.5 per cent from an earlier estimate of 5.3 per cent and said the coronavirus pandemic will cause an unprecedented shock to the global economy.
In response to the 21 days lockdown , renowned economist Jean Dreze on Sunday had said The Indian macroeconomic situation is bleak and all set to get worse if local or national lockdowns continue for some more time.