Effect of Recession on Stock Market

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<ul><li><p>8/14/2019 Effect of Recession on Stock Market</p><p> 1/7</p><p>THE PROJECT IS PRESENTED BY</p><p> MAHASWETA G. ROLL NO. 10</p><p> SWAPNALI GHADGE ROLLNO. 11</p><p> SMITA GUJAR ROLL NO. 12</p><p> PRANEELA PATIL ROLL NO. 31</p><p> DIPIKA PUJARI ROLL NO. 32</p><p> VIKAS RAJPUT ROLL NO. 33</p></li><li><p>8/14/2019 Effect of Recession on Stock Market</p><p> 2/7</p><p> The economy is a cycle. First it starts and it takes growth stage, then it takes boom</p><p>stage and then falls down which is recession. Another indicator of recession is a decreasing gross national</p><p>product of a nation, which is observed over two quarters. To be a successful investor you need two main things - the</p><p>knowledge and the right trading platform. Economic activity usually passes through four phases </p><p>recession, depression, recovery and boom. In macroeconomics, a recession is a decline in a country's</p><p>gross domestic product (GDP), or negative real economicgrowth, for two or more successive quarters of a year.</p></li><li><p>8/14/2019 Effect of Recession on Stock Market</p><p> 3/7</p><p> A stock market is a market for the trading of companystock, and derivatives of same; both of these aresecurities listed on a stock exchange as well as thoseonly traded privately.</p><p>Stockbrokers and individuals can invest in the market. Stock markets refer to a market place where investors</p><p>can buy and sell stocks. The price at which each buyingand selling transaction takes is determined by themarket forces (i.e. demand and supply for a particularstock).</p><p> The stock market is one of the most important sourcesfor companies to raise money.</p><p> The economy and the stock market are closely related.</p></li><li><p>8/14/2019 Effect of Recession on Stock Market</p><p> 4/7</p><p> The stock market starts to fall before a recession starts. It starts to recover in the late stages of a recession before the</p><p>recession has reached its bottom. Stock prices almost always start to fall a few months before</p><p>the recession has formally started as signals of animpending slowdown and possible recession are alreadymounting even before a recession is formally triggered.</p><p> The fall in the stock market level in the recession was33.88% in the 1974-75 recession, 10.6% in the 1980recession, 18.2% in the 1981-82 recession, 14.6% in the</p><p>1990 recession, 10.3% in the 2001 recession. Once a recession has triggered a severe bear market, at some</p><p>point before the bottom of the recession the stock marketdoes start to recover.</p></li><li><p>8/14/2019 Effect of Recession on Stock Market</p><p> 5/7</p><p> Black Monday saw bloodbath on Dalal Street as the Indianstock markets crashed by over 1430 points in afternoon trade.</p><p> Why did this huge fall happen? There is a change in the global investment climate.</p><p>One of the primary triggers is the huge fear of the UnitedStates' economy going into a recession with foreigninstitutional investors trying to reallocate their funds fromrisky emerging markets to stable developed markets.</p><p> How long will the markets keep falling? Analysts expect the markets to continue to be choppy for a</p><p>while till global liquidity and commodity prices settle in. With the markets falling, a technical correction in the</p><p>derivatives segment has perpetrated a larger fall.</p></li><li><p>8/14/2019 Effect of Recession on Stock Market</p><p> 6/7</p><p> It really depends on your situation and what type of investoryou are.</p><p> First, remember that a bear market does not mean there areno ways to make money. Some investors take advantage of</p><p>falling markets by short selling stocks. Essentially, an investor who sells short profits when a stock</p><p>declines in value.</p><p> Problem is, this technique has many unique pitfalls and</p><p>should be used only by more experienced investors. Another breed of investor uses recession much like a sale at</p><p>the local department store.</p></li><li><p>8/14/2019 Effect of Recession on Stock Market</p><p> 7/7</p><p> The capital market in India may continue to springmany a surprise in 2009, but smart investors have</p><p>begun to increase their exposure to a few selectivesectors which may outsmart others during this year.</p><p>Analysts largely accept the view that there is not muchdownside to October lows for the Indian equity market. But none is sure how long this bear phase will continue,</p><p>though everyone is convinced that stocks will begin toshine six months ahead of the recovery of the realeconomy.</p><p> Yes, a few sectors or at times, a few individual stockswill give the leadership to the market which has now</p><p>become largely range-bound.</p></li></ul>