Indian Financial Systems and Stockmarkets During COVID 19- Shape off Post Covid Through AI and Other Digital Tools

Abstract

Introduction: Apart from the loss of precious lives, COVID-19 pandemic caused setbacks to all the developmental works, progress of the economy of all countries with serious repercussions on financial systems and stock markets. Most economies, including Indian stock markets since recovered from the shock, showing robustness due to stringent regulatory framework, started rebuilding, from the vertical fall. India as a nation had sufficient leeway to respond to the crisis and market instability, due to its inner strength.

Aim: This is a theoretical study of the reaction of stock markets, also of expansionary monetary policies during pandemic, the resurgence of financial system and recovery of Indian stock markets, with extreme adoption of Digital tools like AI for Algo trading .

Method: Secondary research methods have been adopted, for analyzing conceptual approaches of regulatory frameworks of the Securities market, Central bank, amid volatility, to draw conclusions. The stock market data (NSE) is subjected to VaR test.

Findings: The Study finds that country has responded quickly to the outbreak of the crisis by easing capital and liquidity requirements or at least refraining from the previously planned tightening. At the same time, the authors noticed that loan-based measures and minimum reserve requirements were rarely relaxed and risk weights were not changed at all. Digital tools like Algo trading, AI based advisory gained prominence

Conclusion: The impact of novel coronavirus (COVID-19) pandemic on financial system and the stock markets in India, is significant. But Monetary policy, liquidity operations and aid packages that were offered by the Government have minimized the impact to a large extent and brought the financial systems back onto the rail.

Key Words: Corona Virus, Financial Markets, Stock market, Algo trade.