With major economies of the world slowing down or heading to a recession, it is very likely that the stock markets will also correct or sees a substantial fall prior to stabilizing
The indices of the American Market are shown below:
Similarly, indices of the European & Japanese Market are shown below:
The reason for the flight of capital from the equity market is linked to
- Rise in Interest Rates by the Federal Reserve and Other Central Banks, thereby making debt a better venue to earn returns in comparison to equities
- A rise in commodity prices (especially essential items like food grains, cooking, etc.) will lead to undercutting of profits and leave a deep impact on the future earnings
Having stated this, the crash in the market is pretty unlikely as the markets have become resilient after seeing the 2008 Crash, 2011–12 High Inflation Cycle, 2020–2021 Covid Linked Impact on supply chain & semiconductor components. Owing to this, the rise in interest rates or prices will delay global recovery but will not lead to an outright crash.
Accordingly, I have written about stocks to keep on the radar whenever there is a correction to gain in terms of returns
- What are the most profitable and risk-free Indian stocks to buy in 2022?
- Will the Russia-Ukraine conflict result in a worldwide stock market crash in 2022?
- What should I do about my stock portfolio? Should I buy now, or will there be more correction?
- What are some good-quality stocks that I can blindly accumulate during a market correction in 2022?
Hope this helps