Published Online:April 2025
Product Name:The IUP Journal of Applied Economics
Product Type:Article
Product Code:IJAE020225
DOI:10.71329/IUPJAE/2025.24.2.28-54
Author Name:Shagun Srivastava, Anshool Agrawal, Bhavya Chandra, Siddharth Agrawal, Aditya Dhole, Aditya Billore and Saurabh Vyas
Availability:YES
Subject/Domain:Economics
Download Format:PDF
Pages:28-54
This paper seeks to understand whether there is any commonality between all the market falls and crashes that have hugely impacted investors’ wealth. Finding a pattern in global market crashes and their recovery from the impact would give us an idea about how the market reacts and responds during crashes. While acknowledging the inherent complexity in predicting future crashes, the study highlights valuation metrics, economic indicators and market sentiments as significant indicators of market trends. Investigating long-term market crashes and subsequent recovery patterns through a comprehensive literature review, statistical modeling, and technical analysis, the study identifies common contributing factors to market downturns, including economic instability, asset overvaluation, fraudulent activities, global events, and geopolitical tensions. The study could help in predicting the next market fall and even in generating signals of bounce back/market recovery.
The economic growth of a nation heavily depends on the stock market, and its role in the recent past has been dominant (Salameh & Ahmad, 2022). The sudden crash in global markets due to the Covid-19 pandemic led to a significant downward trend in the Indian financial market, with foreign investors (FPIs) shifting to dollar-backed assets (Gurbaxani & Gupte, 2021).