The Impact of COVID-19 Pandemic on Stock Markets

Abstract

This research delves into the effects of the COVID-19 pandemic on volatility in the global primary stock market by employing a generalized autoregressive conditional heteroskedasticity model. The investigation encompasses the utilization of daily closing values for two major equity indices, namely Nifty and Sensex, spanning the period between 2019 and 2022. Moreover, an endeavor was made to juxtapose the returns on stock prices before and during the COVID-19 outbreak. The outcomes revealed discernible volatility in international equities during the pandemic. In terms of the comparative analysis between the COVID-19 era and the pre-COVID-19 period, it was ascertained that index returns exhibited higher values prior to the pandemic as opposed to the period encompassing the pandemic. This paper contributes to understanding of how external shocks, such as a global pandemic, can affect financial markets and provides valuable insights for investors, policymakers, and researchers. It could help inform future investment strategies, risk management practices, and policy decisions in the face of similar events.