REVA Business School

Major Project Proposal

On
EFFECT AND IMPACT ON FINANCIAL MARKET
INFRASTRUCTURES IN SHAREKHAN LTD

Master of Business Administration

Submitted by

Under the guidance of

Prof.SHIVASHARANA

June 2022

Rukmini Knowledge Park, Kattigenhalli, Yelahanka,Bengaluru-560064

www.reva.edu.in
 INTRODUCTION

On 11 March, 2020, the World Health Organization (WHO) officially declared the coronavirus
(COVID-19) outbreak to be a global pandemic . As of 27 March, 2020, the number of
confirmed cases surpassed 500,000, and it continues to rise (WHO). Over 170 countries are
affected, with the US has the most confirmed cases. The outbreak has had clear significant
economic impacts. In the short-term, as many countries adopt strict quarantine policies, their
economic activities are significantly limited. The longer-term consequences of this pandemic
may arise from mass unemployment and business failures. Some industries, such as tourism
and aviation, will certainly face hardships.

While the exact global economic impacts are not yet clear, financial markets have already
responded with dramatic movements. In March 2020, the US stock market hit the circuit
breaker mechanism four times in ten days. Since its inception in 1987, the breaker has only
ever been triggered once, in 1997. Together with the US crash, stock markets in Europe and
Asia have also plunged. FTSE, the UK's main index, dropped more than 10% on 12 March,
2020, in its worst day since 1987.

The stock market in Japan plunged more than 20% from its highest position in December
2019. Central banks and authorities responded immediately by throwing their policy
instruments into the market. For example, on 15 March, 2020, the Federal Reserve (FED)
announced a zero-percent interest rate policy and at least a $700 billion quantitative easing
(QE) program. Following the negative responses to this policy in the market, the FED
announced an unlimited QE policy eight days later. Although most stock markets have
recently begun rebounding, a great deal of uncertainty remains as the pandemic continues.
Topic: EFFECT AND IMPACT ON FINANCIAL MARKET
INFRASTRUCTURES IN SHAREKHAN LTD PRE-POST AND
DURING COVID-19 PANDEMIC

ABSTRACT

Financial market infrastructures (FMIs) provide a critical foundation for the global financial
system. They help maintain orderly financial markets and access to financial services, thus
supporting the provision of credit and capital to consumers, investors, enterprises and the
economy as a whole. FMIs’ contribution to safeguarding financial stability comes into focus
when a sudden shock hits the world’s economy, as was the case when COVID-19 started
spreading across the globe. While the fallout of this pandemic has caused tremendous
economic and market turmoil, FMIs have continued to perform critical services as intended by
their design, demonstrating – once again – their key role in supporting the financial ecosystem
during a global crisis. Although the COVID-19 pandemic has not yet run its course as of the
publication of this paper, and its ultimate impact – on public health and on the global
economy
– remains highly uncertain, FMIs have weathered considerable stress caused by its fallout.
Accordingly, this is a good time to take stock and consider the impact and implications of this
pandemic to better prepare for the challenges ahead.

This paper will also include certain points:

 Summarizing the initial impact of the pandemic on financial markets and FMIs, as well as
immediate actions that were taken to mitigate the associated risks.

 providing an overview of a number of longer-term potential structural changes and

challenges to the economy and the financial industry.

 identifying new focus areas that are emerging as key priorities for FMIs and their
participants to proactively manage risk in a post-pandemic environment.

Keywords: External shock, COVID-19, effect on financial markets, Sustainable

development goals, Analytic hierarchy process.
LITERATURE REVIEW

The related literature can be divided into two strands: (i) a group of studies focusing on
the effects of external shocks on financial markets and (ii) existing literature on the effects
of COVID-19 on economic and financial markets.
The first strand of the literature concentrates on the responses of financial markets to shocks
and crises.
1. Adedapo Soyemi et al. investigated the oil price shock in the financial markets of
Nigeria from 2007 to 2014. They found that this unexpected external shock can affect
the stock market directly and indirectly from the commodity market. The effect of
such an unexpected shock has been proven by several scholars.

2. Bastianin et al. discuss that unexpected shocks with the source of demand shocks can
significantly impact stock market volatility in the G7 countries. The nature of shocks
(demand or supply-side) is a major factor that represents the level of external shock in
the financial market. Le and Chang investigated the nature of shocks and their effects
on stock market performance using generalized impulse response functions for monthly
data from 1997 to 2013. The major results revealed that the nature of the shock is
important because a financial market reacts differently to shocks in demand and
supply. Another external shock is political risk, such as war risk, which can affect global
financial markets.

3. Rigobon and Sack investigated the relationship between the US and Iraq war and
some US financial variables. The major findings showed that with an increase in war
risk, the dollar and oil prices might decrease and increase, respectively. In addition,
Hudson and Urquhart studied the effect of World War II as an exogenous shock on the
British stock market and proved the negative effect of this kind of shock on the stock
market. This negative effect of war risk has been found by other scholars, such as
Schneider and Troeger , Ferguson , and Balcilar et al. . A natural disaster is another
exogenous shock that may lead to deep fluctuations in financial markets.
4. Romero Cortes and Strahan studied how banks adapt their credit supply decisions in
response to exogenous shocks to credit demand. The major findings reveal that even
small banks effectively smooth shocks, even without access to national or global
capital markets.

5. Lewis and Liu investigated the relationship between disaster risk and asset returns.
They found a significant negative impact of disaster risk on equity markets.

6. Rehse et al. attempted to determine the effects of Hurricane Sandy as an exogenous

shock on market liquidity. The findings confirmed the theory of the detrimental
effects of natural
7. disasters on market functioning. One consequence of exogenous shocks such as
natural disasters, war risk, or commodity price shocks is creating uncertainty in
economic and financial markets.

8. Li et al. explained that exogenous shocks could affect economic and financial
markets by creating uncertainty.

9. Yildirim-Karaman investigated uncertainty in financial markets and business cycles.

They found that uncertainty refers to the unclear future performance of the stock,
which negatively affects investors’ activities in the stock market. This negativeimpact
of uncertainty on the performance of financial markets has been proven by many
scholars, such as Ackert , Dzielinski , Vorbrink , Segal et al. , Chulia et al. , and Wang
and Boatwright. However,

10. Wu et al. argued that cooperation between the government, the market, and
various social organizations can create an economic structure that may be affected
less by the pandemic. In addition, some studies (e.g., Li et al. ; Taghizadeh-Hesary et
al. ; and Yoshino et al. have proposed financial instruments and policies to lower the
negative impacts of COVID-19 on financial markets.
The second strand of the existing literature contains studies on the effects of COVID-19
on economic and financial markets.
11. Pak et al. mentioned that the vast number of governments in the world
underestimated the negative consequences of the rapid pandemic outbreak, leading
to inefficient reactions to the negative consequences of COVID-19.

12. Atkeson investigated the future economic impact of COVID-19 in the US. He found
that if the number of infections increases, the US will experience severe staffing
shortages for key financial and economic infrastructure.\

13. McKibbin and Fernando defined seven scenarios for the global macroeconomic
impact of this pandemic. The results showed that the decrease could affect the
global
 economy in the short run, and in response, all economies will increase investment in
health systems to combat the likely long-run effects of COVID-19. Baker et al. focused
on the impact of COVID- 19 on the stock market. The results revealed the
unprecedented impact of this decrease on market volatility in the US.

14. Gormsen and Koijen sought to determine the relationship between coronavirus,
stock prices, and growth expectations. They concluded that this decrease has
strongly affected all stock prices in global stock markets more than growth
expectations in the US. OECD , in the report of the OECD Interim Economic
Assessment, mentioned that this virus should be considered as a major risk for the
world economy due to its large economic disruption, weakening global trade flows,
lowering the level of industrial production, and reducing consumption on the
demand side of the commodities market. Elliott argues that the coronavirus crisis,
like the Great Depression of 1929, may cause us to abandon oil economic policies
and create new economic thinking to save the global economy.

15. Samadi et al. argued that for an under-crisis country such as Iran, the pandemic
brings more confusion and uncertainty in the investment and industrial production
sectors.

16. Barrafrem et al. conducted a survey to determine people’s opinions in Sweden and
England about the future of their lives. The major results addressed the predicted
inappropriate financial situation of countries after the COVID-19 outbreak.

17. So et al. used network analysis to determine the impact of the pandemic on financial
market connectedness. The results show that the pandemic increases systemic risk
in financial markets, which has more impressive negative impacts than previous
financial crises in the past 15 years.

18. Yoshino et al. theoretically show that investors' current allocation by considering
SDG based on various consulting companies will distort the investment portfolio
post-COVID-19.
According to their study, the desired portfolio allocation can be achieved by taxing
 pollution and waste, such as CO2, NOx, and plastics, globally, with the same tax rate.
Global taxation on pollution will lead to the desired portfolio allocation of assets. In
another studies,

19. Ozkan,Vera-Valdes and Li and Yan sought to determine how COVID-19 affected the
financial markets in six developed nations. They found that the pandemic increased
the volume of fluctuations and imbalances in the markets, particularly in the United
States and the UK. This finding is similar to that of other studies, such as Uddin et al.
for 34 developed and emerging economies and Aharon and Siev for 25 international
capital markets.
Overall, the existing literature highlights the lack of sufficient academic studies on
the effects of COVID-19. In particular, since this issue is fresh, complex, and multi-
dimensioned, it is necessary to employ an appropriate technique to address the
problem of lack of quantitative data. To this end, this study seeks to contribute to
the existing literature by using a multi- criteria decision-making model (MCDM),
namely AHP, to identify and prioritize the impacts of COVID-19 on financial markets
of developed and developing nations. Therefore, we will try to fill this gap in the
literature by using the AHP technique to analyze experts’ opinions about the impacts
of COVID-19 on global financial markets.
 OBJECTIVES OF THE STUDY

1. To study the effect of pandemic on the Economy and stock markets due to long
locks downs, panic in among the investors and their behavior .

2. To understand how the financial markets have reacted before, after and during
pandemic.

3. To understand the financial planning and making financial security by companies and
investor to protect form the possible volatility and downside in such pandemics and
negative events .
 METHODOLGY

Methodology of the project starts with :

In first place phase we are trained and they teach us different things about market.
After that they conduct a mock viva, in this they ask about the real life problem faced by the
customer during the pandemic
They provide leads and after that we make calls.
Than after that we have to provide details of product and convenience them
Then we have to visit them and get them formed filled from them
Maintaining diary of clients and contacting them at regular basis
Get the knowledge of technical as well as fundamental methods
Observe the pattern of the script wealth creation is not an art
Its an attribute of one’s attitude towards money
They are threatened and became afraid in investing during the covid 19 pandemic.
Every time investors are confused with investment avenues and their risk return profile.
So, even if people focus on past present and future investment is such a topic that needs
constant upgradation as economy charges.

RESEARCH DESIGN AND SAMPLING:

In this research, a questionnaire is designed to gather the information which is relevant to

this project topic as well as secondary sources have been collected to study the effect on
financial market ( pre - post and during covid 19 pandemic).

QUESTIONNAIRE PREPARATION:
As a questionnaire is a vehicle to obtain information from certain targeted respondents, it is
designed and framed in view of the respondents.
SAMPLING TECHNIQUE:

The study is done on the base of convenient of the researcher i.e.by using convenient
sampling or non-probability sampling. The data is collected on the various sources that is
related to investors perception towards financial market ( pre - post and during the
pandemic)

SAMPLE SIZE:

50 Respondents

TOOLS OF ANALYSIS:

1. Questionnaire

2. Bar charts

3. Published sources

SOURCES OF DATA

PRIMARY DATA The primary data collection method the data is collected by the researcher
from the various sources like survey, interview, etc. And it is also called as first-hand data.
The primary data is collected specifically to address the problems in questions. The primary
data usually collected from the originally originates from and regarded as the best kind in
research.

PRIMARY DATA

 Questionnaire

SECONDARY DATA

The secondary data refers the data is used by the researcher which is already collected by
some other persons.

 Articles, Textbooks , Publications , newspaper , internet and websites such as

moneycontrol.
LIMITATION OF THE STUDY:
1. The findings cannot be generalized as it takes only 50 respondents.

2. Requires lot of time for data collection and study.

3. Different methods, techniques , tools And techniques are use to collect the data.

4. Because of limited time for research it becomes difficult to gather every data
and information.
REFRENCES
 Ackert LF. Uncertainty and volatility in stock prices. Journal of Economics
and Business.
 Atkins A, Niranjan M, Gerding E. Financial news predicts stock market
volatility better than close price. The Journal f Finance and Data Science.
 Aharon D, Siev S. COVID-19, government interventions and emerging capital markets
performance. Research in International Business and Finance.
 Albulescu C. COVID-19 and the United States financial markets’ volatility.
Finance Research Letters.
 Ankudinov A, Ibragimov R, Lebedev O. Sanctions and the Russian stock
market. Research in International Business and Finance.

WEBSITES

http://www.nseindia.com/

http://www.moneycontrol.com/

http://www.sharekhan.com/

https://academic.oup.com/