This too shall pass: Experts tell investors not to worry even as global markets witness downward spiral amid coronavirus outbreak

The global markets continue to see a downward spiral, even though the BSE Sensex is trying to recover amid the coronavirus pandemic that has affected billions of lives. Even those who haven’t been individually affected are facing the consequences due to the shutdown of various industries, both in the public and private sector

The Dow Jones, the stock market in the United States, witnessed one of the worst economic crashes since 1987, but slowly recovered after US President Donald Trump tweeted that the United states would be ‘powerfully supporting industries such as airlines that are affected by the Chinese virus.’

For those not well acquainted, the 1987 stock market crash, which is also known as ‘Black Monday’, took place in October 1987, and saw the Dow Jones fall by 22.6 per cent, thereby affecting global markets.

But how does this affect India?

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With globalisation, it’s fair to say that the world has become a single economy, as global markets work in sync. In 2008, during the recession, the collapse of the real estate market in the United States, had an adverse effect globally. India, too, felt tremors of the global recession with job cuts and market crashes.

The coronavirus pandemic, too, has affected the global markets in a similar way. Following the outbreak, experts see a 2.2 per cent growth in the global economy, compared to the 2.9 per cent that they had predicted. The manufacturing sector, airlines, public transport, oil industry, etc have all witnessed significant drops in revenue because of the pandemic.

However, Neeraj Choksi, Jt MD of NJ Group feels that pandemics have affected markets in the past, and there is nothing to worry about for long-term investors. Citing the example of SARS, Avian Influenza (Swine Flu), Ebola, and Zika, Choksi said that the returns during the outbreak read as -10.7 per cent, -12.23 per cent, 1.58 per cent, and – 13.14 per cent respectively.

“While I am not an expert on CORONA VIRUS to predict its damage but am very clear based on historical and statistical evidence that the crisis will end sooner than we think and the damage would be far lower than what the market has reacted too,” he said.