Impact of Covid-19 on Economy & Stock Market

Covid-19 (or) Coronavirus is still spreading all over the world as the world opens up from the lockdown slowly. In today’s post, lets discuss the short-term and long-term impact of Covid-19 on Economy and Stock Market.

Before we get started, I would like to mention one important thing – THE WORST IS YET TO COME – both on health and financial aspects. This is my personal opinion though, so take care of your physical and financial health as next 18-24 months will be most difficult phase of our lives.

Almost 2 years back, I have published a detailed video & post on impending market crash in 2019-2020. Here is the link to the video – https://youtu.be/1Be9X4J7mgI and in the last post, we discussed on “How to invest during market crash for best returns“.

Now let’s discuss in detail about the short-term and long-term impact of Covid-19 on Economy and Stock Market.

Short Term Impact on Economy & Stock Market: 

• Short-term impacts of Covid-19 are already visible on Economy as GDP of the country and the world as a whole is set to go down.
• Tourism, Airlines/Travel, Hospitality and Restaurants will incur the maximum damage as people will avoid these as much as they can in the short-term as the changes of infection is high.
• Automobiles, financial sectors will be the next in the line, as people will cut down spending and investing.
• Pharma and IT are the 2 sectors which could see positive growth, as the race towards vaccine gets heated. And with social distancing being the new normal, lot of scope for IT industry to contribute by bringing most services online.
• Global & Indian markets have already crashed around 30% . Though there was a recovery in May 2020, this V-shaped recovery will be short lived as the impact of covid-19 is not priced in fully. 
• Oil pries (Futures) have already went to negative in April 2020 and recovered now. But oil will continue to remain volatile and around 30$ mark in the near future.
• Gold prices are at all time high and 
• We will see further drop in stock prices when the companies declare results for Q1 & Q2 of 2020. Market will continue to be in bear territory in the short-term. This time drop will be slow and hence painful.

Long Term Impact on Economy & Stock Market: 

• Economically, we(the world) seems to be moving towards Zero/Negative interest rates which will have a broad impact on the economy, though the interest rates will remain positive in India.
• We will see USD losing it’s value slowly as China emerge stronger in post Covid-19 world, unless world makes a tough stance against China.
• We are already seeing lot of debt defaults which will continue to raise. We will see huge number of bankruptcies and unemployment all over the world which will cause long-term social and economic problems. 
• I’m expecting market to fall 50-66% from it’s lifetime high before it makes new highs.
• Gold will continue to remain strong and Oil will continue to remain weak in the long term.
• We will be hit with waves multiple times in the next few years – multiple Covid waves & multiple sell-off waves. Economy and Stock Market will take much longer to recover this time. So plan your investments accordingly.

All the points mentioned above are my personal observations on economy and stock market. Please do your own research before making any investment decisions.

Please leave a comment in case of any questions.