impact on recession on stock market

8/14/2019 impact on recession on stock market

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TERM PAPERMANAGEMENT PRACTICES AND ORGANIZATIONAL

BEHAVIOR

TOPIC: IMPACT OF RECESSION ON SHARE MARKET

SUBMITTED BY: SUBMITTED TO:

FARHA NAAZ Miss. TANU

ROLL NO: A-8

REG. NO: 10905851

SECTION: 1904


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Introduction

The fear of a recession looms over the United States. And as theclichs goes, whenever the US sneezes, the world catches a cold. Thisis evident from the way the Indian markets crashed taking a cue froma probable recession in the US and a global economic slowdown.

The recession in the US market and the global meltdown termed asGlobal recession have engulfed complete world economy with avarying degree of recessional impact. World over the impact hasdiversified and its impact can be observed from the very fact offalling Stock market, recession in jobs availability and companiesfollowing downsizings in the existing available staff and cuttingdown of the perks and salary corrections. Globally the financial sectorsacking the existing base of employees in high numbers in US themajor example being CITI Group same still followed by others inhospitality industry Jet and Kingfisher Airlines too. The cut in salaryfor the pilots being 90 % can any one imagine such a huge cut insalary.

Weakening of the American economy is bad news, not just for India,but for the rest of the world too.

So what is a recession?

Economic recession is defined as significant decline in the economicactivity across a globe, lasting longer than few months. It can be seenin variables like GDP growth, industrial production, retail, real

personal income & employment.

In economics a recession is a slowdown in economic activity &

contraction of business cycle over a long period of time. Recessionleads people loose their jobs, banks became bankrupt.

Identification of recession:-

Economic statician Julius shishkin in 1975, New York Times article

suggested several rules of thumbs for identifying a recession. In time,

the other rules of thumb were forgotten & recession is defined as fallin G.D.P. ne ative real economic rowth .


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In the United States the business cycle dating committee of the

national bureau of economic research (NBER) is generally seen as the

authority for dating US recessions.

A recession is a decline in a country's gross domestic product (GDP)

growth for two or more consecutive quarters of a year. A recession is

also preceded by several quarters of slowing down.

Sometimes we have to find out development in development.Economies are booming but arethey real? Many thinkers say that this development is just a recoveryofrecession, it should not be seenas a boom or green shoots. Countries like India has shownsusceptibility against recession strike now andmarkets are again moving up, but according to the market analysesits not something extraordinary.Indian markets are very less dependent upon local industrial units;major investments are from outerworld (FII). is the back bone ofIndian economy) clashed.

What causes it?

An economy which grows over a period of time tends to slow downthe growth as a part of the normal economic cycle. An economytypically expands for 6-10 years and tends to go into a recession for

about six months to 2 years.A recession normally takes place when consumers lose confidence in

the growth of the economy and spend less.

This leads to a decreased demand for goods and services, which inturn leads to a decrease in production, lay-offs and a sharp rise inunemployment.

Investors spend less as they fear stocks values will fall and thus stockmarkets fall on negative sentiment.

Stock markets & recession

The economy and the stock market are closely related. The stockmarkets reflect the buoyancy of the economy. In the US, a recessionis yet to be declared by the Bureau of Economic Analysis, butinvestors are a worried lot. The Indian stock markets also crashed due

to a slowdown in the US economy.The Sensex crashed by nearly 13 per cent in just two trading sessions

impact on recession on stock market

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