For the past few months, most retail investors have seen their portfolios fall by 10 to 20%. Though the stock market has rebounded in the last week, the storm is not over yet. This is because the world is heading towards a Recession. The European Countries are already dealing with the Recession and US might face it by next year.
The US is already experiencing a mild recession with low demand and record high inflation. India is a significant service exporter to the US and a slowdown in the US economy will hit the foreign reserves of India directly. This would mean lower revenue for Indian Companies, especially in the IT sector. It would also lead to layoffs and fuel the funding winter in the startup economy. Low Foreign Reserves would make import of oil and commodities costlier, thus increasing the cost of living.
So, all these factors might put the Indian Economy into a Recession and thus a yet another market crash. Here are some sectors that would be affected by the coming market crash due to the Recession.
Automobile Sector
India is a major exporter of Automobiles, especially to European countries. The Automobile industry majorly exports two-wheelers which comprise around 79% of the total Automobile exports as of FY21. Also, the majority of the production and consumption volume is of two-wheelers within India. The sale of this segment is highly dependent on the middle-class population. A recession mostly hits the income of the middle class and a global recession would also affect exports.
Electronic Goods
India is a major exporter of consumer electronics, IT Hardware, and industrial electronics. The USA is the largest importer of Indian electronics accounting for 18% of the overall exports. During the Recession, people start spending less on consumer electronics like TV, fridges, and other white goods. This builds some pressure on the Electronic goods stocks which are more likely to be affected by this market crash.
Hospitality Sector
Whenever an economy faces a Recession, people refrain from going to restaurants and mostly cut their expenses on travel holidays. This sector does not come in essentials for survival and is most likely to be affected. It brings a correction in the stocks of airlines and hotel chains.
Textile Industry
The textile industry is already facing a rise in input costs due to the looming fear of a global recession. India is the sixth-largest exporter of textile and apparel products in the world. During FY2021-22, India exported around 45% of its textile to the USA and European Union. The European countries are already facing a recession, and many export orders have been lost. With the US Recession coming on its way next year, this sector could face the chills.
Conclusion