The year 2020 that draws to a close today shall be remembered for all the chaos it brought with the Covid 19 pandemic. And for the global financial world too it has been an unprecedented year, here is a wrap up to the year with few of the major events that unfolded during the year 2020:
1. Indian indices crashed by a steep 38% in March from all time highs to now trade near new peak:
After coronavirus began to spread in the country and there were reported as many as 415 cases, indices on March 23, 2020 nosedived by a huge 38% from all-time high struck on January 14, 2020 of 41,953 to 25981 on the Sensex. On the same day, Nifty was dragged down to 7,583 points.
But since then after coronvirus led restrictions were eased and economic activity got back on track, there was seen resilience in the Indian markets which after erasing all the corona-led losses of March, zoomed to new highs on global positive news flow which was triggered by the US Presidential elections. Then on coronavirus vaccine optimism and in the latest round US stimulus which has now been signed into law and the historic Brexit deal is aiding investor sentiment. Now, the NSE 50 Nifty index is testing levels of 14000.
Biggest Sensex gainers during March and December in Percentage terms
|Stocks||March-Dec (% Gains)|
|Mahindra and Mahindra||149|
Note the able table is compiled by ETIG database. Data as on December 18, 2020
During the year 2020, equity markets were exceptionally volatile with Nifty VIX averaging at 26.88 as against a 10-year average of 18.48.
2. Abrupt closure of six debt schemes by Franklin Templeton:
Due to liquidity constraints and redemption pressure as asserted by the fund house, there was an abrupt closure of six debt schemes in April this year. This brought to fore the risk associated with debt schemes. And now as the case is being heard by the SC, the fund house has been asked to take investors' consent to wind up the schemes. And the e-voting for the same was conducted this month followed by unit holder meet on December 29.
3. Crude prices tumbled to the never before charted negative territory:
Crude prices in the US in April fell below zero mark for the first time as sellers were ready to pay buyers for holding the commodity in order to avoid the storage cost. WTI traded at around -$3.7 per barrel as on April 20. But since then prices regained to now hover above $50 per barrel mark on optimism around global economic recovery likely fuelling the demand for the commodity.
4. Loan moratorium announced to help borrowers:
Amid the pandemic, to help borrowers amid cash crunch, the RBI announced moratorium for six months wherein they were not obligated to pay off the loan EMI. And now, the SC is hearing the case to waive interest on interest applicable during the moratorium period. Also for the tenure the government has asked banks not to tag loan account as NPA that was standard.
Further in view of the pandemic, the SC has asked the government to forego interest on eight specified loan categories up to Rs. 2 crore.
5. Job losses and work from home:
With the lockdown announced in the last week of March to stop the spread of the deadly virus, there was a complete standstill of business activities with many companies taking on to downsizing and unemployment levels surged to 24% in May but later recovered to 6% in September. Also, there was an unprecedented shift in workplace to now office location and home premises being the same for many organized workforce. In fact in view of the success as well as reduced cost, many IT firms are seeking to make a complete shift to working from home by 2025 say as in the case of TCS i.e. planning on similar ground.
6. Gold gave massive return of 28% and emerged as the most preferred asset:
In uncertain environment as in the current pandemic times, gold gains appeal as a safe haven and store of value. And amid all the headwinds, gold stood strong and in rupee terms gained by a whopping 28%, while internationally it breached the psychological level of $2000 per ounce and with some correction in due time, the momentum (upside) is likely to sustain in 2021.
7. SEBI's attempt to rationalize Multi-cap funds i.e. they be true to their label:
As majority of the funds avoided small and mid-caps to shun the volatility associated with them, now the SEBI has asked these schemes to mandatorily put 25% each in small, mid and large-cap scrips and the remaining can be put as per the fund manager's discretion.
8. Standardisation of health insurance plans:
Such that health insurance reached more and more people, there was introduction of 2 health insurance plans i.e. Arogya Sanjeevani and Corona Kavach. These products aimed at easing health insurance plan buying with uniformity in features across insurers.
9. Covid 19 led India to technical recession:
With 2 consecutive quarters of negative growth i.e. -23.9% in Q1FY21 and -7.5% in Q2, the Indian economy virtually entered into technical recession. But it is being said, that though some quantum of the negative growth could be owed to the pandemic, the situation was already in the decline.