The year 2020 has been more than what we bargained for. From a pandemic called COVID-19 hitting almost the entire world, to the hardships caused by the lockdown to several businesses, to border tensions, and fears of a slump in corporate profitability, to cancellation and/or postponement of major sporting and social events, this has been quite a year so far.
The stock market in India has seen quite a roller-coaster ride. The S&P BSE Sensitive Index had fallen from a high of 42,273.9 in January 2020 to 25,638.9 in March 2020 (a fall of over 39%). This has been one of the sharpest falls in India’s stock market ever. However, the Index has staged a decent recovery, and at the end of June 2020, has risen to 34,915.8, which is a rise of 36% from the bottom of the year.
Global economic growth is forecast to edge up to 2.5% in 2020 as investment and trade gradually recover from last year’s significant weakness but downward risks persist with advanced economies growth slipping to 1.4% whereas emerging and developing economies expected to grow at 4.1%.
Corona Virus: There will be an impact on global trades considering recent incidences of effected cases of virus in countries other than China and hence broadly global markets will remain volatile including India.
The world economy is afflicted by weak sentiment, trade-related disruptions, and rising downside risks to growth. Central banks leaning towards lower rates reflects growing pessimism on the growth front. The calm that characterised global financial markets in the beginning of 2019 has been dispelled since May, with a combination of trade and geo-political tensions and the worsening global growth outlook imparting heightened volatility.
In all corners of the globe, warning signs are flashing about the state of the economy. The IMF has recently downgraded its forecast for global economic growth for the 4th time in 9 months to 3.2%. 70% of the global economy is expected to experience slowdown this year, the IMF forecasts. The IMF isn’t projecting a recession but its an uncertain and bumpy path ahead. To add fuel to the fire, the US-China trade war is not giving any certainty and keeps on bringing volatility around the globe.