How likely is the stock market crash in 2021?

The world has been shaken by the waves of Covid-19 pandemic and despite the immunization program being carried out at a frantic pace, the fear of relapse does lurk on the horizon.

Covid-19 Coronavirus Pandemic - Free photo on Pixabay
World Affected by Covid-19 Pandemic

With initial outbreak bringing the entire world to a standstill, commerce was affected severely. The partial to complete unlock which was done based on flattening of the curve(number of cases/day), did see some acceleration in economic activities but the process was short lived owing to virus mutation.

Syringe Vaccine Virus Covid - Free image on Pixabay
Anti-Covid Vaccines which are being administered worldwide

The mutation cycle may soon turn to be norm till herd immunity catches up. Companies world over have used a mix of different approaches to tide with the disruption namely unofficial hiring freeze has been enforced, workforce has been trimmed and there is cutback on spending & capital expenditure(capex) plans.

Work From Home Remote Working - Free image on Pixabay
WFH during the Lockdown owing to Covid-19 Pandemic

As many of the companies are listed on Domestic and Overseas Stock Market, we will have to look at the bigger picture for the year 2021 by asking an intriguing question:

How will companies sustain growth?

We list down some factors that can either accelerate growth(rise in the stock market) or keep the growth stagnant(fall in the stock market). The factors are as follows:

Covid-19 Control: Immunization and Spending on health care sector

India Inc earnings: Corporate profitability to recover in second half of  FY21: Report - The Economic Times
Market & GDP Recovery Linked to stemming Covid-19

Bond Yields: Access to low-cost debt essential for companies aiming to recover from the Covid-19 linked disruption

Percent Discount Reduction - Free image on Pixabay
Low-cost debt borrowing crucial for recovery

Crude Oil Prices: Despite the thrust on Clean Energy, the dependency on Fossil Fuels is going nowhere in the short term and any disruptions in the supply chain or cutback from OPEC will lead to slide of economies world over

OPEC Forecasts Lower 2019 Crude Oil Demand | Financial Tribune
Crude Oil Cartel – OPEC

Corporate Earnings: Results from companies in different sectors listed on the Stock Exchanges like NASDAQ, FTSE, NSE, BSE, NYSE, LSE, SGX etc. will bring clarity on recovery

40+ Free Nasdaq & Market Images
Corporate Earnings on the Stock Exchange

Exports: Commerce i.e. Goods Movement will be essential for recovery

Containers Cargo Export - Free photo on Pixabay
Exports are vital for recovery of any economy

Government Spending: Efficacy of the spending and its outcome will be crucial for recovery

Resource Allocation Software for Consulting Firms Has Fast ROI | by BigTime  Software | Medium
Govt. Fund Allocation towards sectors of the Economy

Impediments on the above factors can lead to a crash & loss of valuable investor wealth in the calendar year.

Kindly keep an eye on the above factors before investing your money in the markets. This can decide how & when your money can bring rich capital gains and dividends

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