The Indian equity market has suffered over the past three years due to a multitude of regulatory and disruptive events. Listed corporates have posted mixed results with a small proportion continuing to do well while a lot of others are facing tough times in dealing with various disruptive factors. The latest slowdown due to the Covid-19 lockdown does not help matters. Nifty fell about 38 per cent from the recent high to low.
Most stocks are down even more.
Earnings estimates of companies have been cut sharply, while risk appetite has fallen among investors.
The measures taken by the government are focused on cutting interest rates, making liquidity available and providing moratorium for three months to businesses and individuals apart from providing relief to the downtrodden. The lockdown has since been extended from initial 21 days to 40 days. In such a situation, selective opening of the economy with appropriate safeguards in place are required to avoid a lasting damage to businesses and to create avenues for earnings for the self-employed and migrant labour.
Though, we have in the past seen markets bounce back from such selloffs, the repeated wealth erosion for small investors needs urgent attention from the powers that be.
Given the challenges, here is an attempt to list out some measures that can help revive investor interest in
equity markets, improve demand for equities and encourage supply of
risk capital.