TERM PAPER

MANAGEMENT PRACTICES AND ORGANIZATIONAL

BEHAVIOR
TOPIC: IMPACT OF RECESSION ON SHARE MARKET

SUBMITTED BY: SUBMITTED TO:

FARHA NAAZ Miss. TANU

ROLL NO: A-8

REG. NO: 10905851

SECTION: 1904
Introduction
The fear of a recession looms over the United States. And as the
clichés goes, whenever the US sneezes, the world catches a cold. This
is evident from the way the Indian markets crashed taking a cue from
a probable recession in the US and a global economic slowdown.
The recession in the US market and the global meltdown termed as
Global recession have engulfed complete world economy with a
varying degree of recessional impact. World over the impact has
diversified and its impact can be observed from the very fact of
falling Stock market, recession in jobs availability and companies
following downsizings in the existing available staff and cutting
down of the perks and salary corrections. Globally the financial sector
sacking the existing base of employees in high numbers in US the
major example being CITI Group same still followed by others in
hospitality industry Jet and Kingfisher Airlines too. The cut in salary
for the pilots being 90 % can any one imagine such a huge cut in
salary.
Weakening of the American economy is bad news, not just for India,
but for the rest of the world too.
So what is a recession?
Economic recession is defined as significant decline in the economic
activity across a globe, lasting longer than few months. It can be seen
in variables like GDP growth, industrial production, retail, real
personal income & employment.
In economics a recession is a slowdown in economic activity &
contraction of business cycle over a long period of time. Recession
leads people loose their jobs, banks became bankrupt.

Identification of recession:-
Economic statician Julius shishkin in 1975, New York Times article
suggested several rules of thumbs for identifying a recession. In time,
the other rules of thumb were forgotten & recession is defined as fall
in G.D.P.(negative real economic growth).
In the United States the business cycle dating committee of the
national bureau of economic research (NBER) is generally seen as the
authority for dating US recessions.
A recession is a decline in a country's gross domestic product (GDP)
growth for two or more consecutive quarters of a year. A recession is
also preceded by several quarters of slowing down.
Sometimes we have to find out development in development.
Economies are booming but are
they real? Many thinkers say that this development is just a recovery
of recession, it should not be seen
as a boom or green shoots. Countries like India has shown
susceptibility against recession strike now and
markets are again moving up, but according to the market analyses
it’s not something extraordinary.
Indian markets are very less dependent upon local industrial units;
major investments are from outer
world (FII). is the back bone of Indian economy) clashed.

What causes it?

An economy which grows over a period of time tends to slow down
the growth as a part of the normal economic cycle. An economy
typically expands for 6-10 years and tends to go into a recession for
about six months to 2 years.
A recession normally takes place when consumers lose confidence in
the growth of the economy and spend less.
This leads to a decreased demand for goods and services, which in
turn leads to a decrease in production, lay-offs and a sharp rise in
unemployment.
Investors spend less as they fear stocks values will fall and thus stock
markets fall on negative sentiment.

Stock markets & recession

The economy and the stock market are closely related. The stock
markets reflect the buoyancy of the economy. In the US, a recession
is yet to be declared by the Bureau of Economic Analysis, but
investors are a worried lot. The Indian stock markets also crashed due
to a slowdown in the US economy.
The Sensex crashed by nearly 13 per cent in just two trading sessions