InvestorQ : Why the market is positive in spite of a recession being announced?
sanjana Tulsiani made post

Why the market is positive in spite of a recession being announced?

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Niharika Kamble answered.
4 months ago
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The recession that has been announced was a direct result of the Covid-19 induced lockdown. We all know what had happened last year. We had complete lockdown across the board for a period of over 3 months. Later, the lockdown was extended in parts of the country, with some states embracing the ease of restrictions. This is a ‘technical recession’ since the economy has contracted for two consecutive quarters. If goods weren’t produced and movement across regions was strictly restricted if not curbed, then there is bound to be a negative impact on the economy.

The next point I wanted to talk about is the fact that the economy and stock markets are not correlated in a fundamental, at least direct, way. Markets are driven by sentiments, emotions, and a bet on the performance of a company, and in extension, the economy. This doesn’t mean that you will necessarily witness a direct impact on the current economic performance in daily trading. You could, but it's not mandatory. The market always looks at the future. Market enthusiasm may be driven by pricing in the resumption of normal economic activities. The recessionary economic trends may have already been discounted by the index.
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