AN ANALYTICAL STUDY ON THE EARLY IMPACT OF COVID-19 ON GLOBAL STOCK INDICES A COMPARATIVE APPROACH OF INDIAV/S SPAIN, FRANCE, UK, USA, GERMANY AND ITALY

Abstract

The spread of the corona virus disease COVID-19 has severely impacted the global financial markets. These are incredibly uncertain times, with countries around the world suffering the destabilizing effects of the pandemic. This research paper evaluates the early impact of the coronavirus outbreak on nine leading stock market indices in majorly affected countries including India, Spain, France, the USA, Germany, Italy, and the UK. The consequences of infectious disease are considerable and have been directly affecting stock markets worldwide. The scope of this paperis confined to the analysis of nine global indices including NASDAQ, Dow Jones, FTSE 100, IBEX 35, FTSEMIB, CAC 40, BSE, NSE and DAX 30 composite. The COVID-19 impact has beenanalysed on the above-mentioned indices for the period of 30st Jan 2020 (announced as a pandemic by WHO) to 30th April 2020. i.e. a period of 90 days (63 trading days) are considered for a paired sample t-test. Using an event study methodology, the results indicate that the indices of these majorly affected countries fell sharply after the virus outbreak. Countries in Asia experienced higher negative abnormal returns as compared to other countries. Further, Regression results also support the adverse effect of COVID-19 confirmed cases on stock indices, abnormal returns through an effective channel by adding up investors pessimistic sentiment on future returns and fears of uncertainties.