The Indian stock market indices have fallen over 20 percent from their record highs (seen in January). BSE's Sensex was trading below 35,000 on Thursday morning compared to its January high of 41,859 and NSE's Nifty 50 fell below 10,000 from its all-time high of 12,362 points.
In the US, Dow Jones Industrial Average was also down by 20 percent from its intraday high last month and raised fears among analysts as the American index has never fallen into a bear market this fast in decades. Dow has entered the bear market in 19 days, which is the fastest since 1931 during the Great Depression. The decline was mirrored by equity markets around the globe.
What is a Bear Market?
A bear market is when an index falls over 20 percent from its recent record high.
The concern now is that this is the first time that the global markets have entered the bear market since the recession of 2008.
The decline in the already ailing equity markets deepened after the World Health Organisation (WHO) declared COVID-19 a pandemic after the virus spread infections to over 124,000 people and has claimed lives of 4,600 people around the world.
First cases of infection also emerged in Mumbai, India's financial capital and most populated city.
Stock markets entered correction mode late last month after a sudden increase in coronavirus cases outside China, where the disease was first identified.
How long before markets recover?
A study by CNBC and Goldman Sachs has shown that there have been 12 bear markets since World War II, excluding the current one, where an average decline of 32.5 percent was observed.
The last one was from October 2007 to March 2009, when markets fell 57 percent and took over four years to recover. This was the period of the great recession in the global economy which lasted 19 months.
On average, bear markets after World War II have lasted 14.5 months and have taken two years to recover.
However, analysts are not willing to call it a recession yet.
At the meeting of the leaders of the biggest US banks with President Trump on Wednesday, the executives pointed out that, unlike during the last recession, the current crisis isn't a financial one. In 2008, the recession was caused in part by excessive bank leverage and irresponsible mortgage lending.
But the economic outcome of the coronavirus outbreak is concerning. Apart from travel restrictions, consumers have limited their purchases as they refrain from going to public places over the fear of contracting the infection.
Production in China, the manufacturing hub of the world, is also yet to stabilise.
In Italy, Premier Giuseppe Conte on Wednesday announced all stores in the country, except pharmacies and groceries, to be closed in a move deemed to safeguard the health of its residents. If more countries make such moves, it is likely to tip the global economy into recession.
In a note, Harris Financial's Jamie Cox said that the markets are currently like "a chicken with its head cut off."
Being a novel coronavirus disease, scientists are still working on the cure or vaccination for infection and there is no certainty on how long before the spread stops and how far the infection will go.
It is definitely rare for a disease to be declared a pandemic by WHO, raising concerns of what's to come and how the economies will be affected by the fall in consumption. It is equally unpredictable on how long before the stock markets recover.