Volatility in the Equity Stock Market in India from 2019 to 2024: An Empirical Analysis

This research investigates the volatility and fluctuations in the Indian equity stock market from 2019 to 2024, a period characterized by unprecedented global and domestic challenges. The Indian stock market, like many emerging markets, experienced heightened volatility due to a confluence of events, including the COVID-19 pandemic, geopolitical tensions, economic reforms, and shifts in global financial conditions. The study employs advanced econometric models, including GARCH (Generalized Autoregressive Conditional Heteroskedasticity) and event study analyses, to capture the time-varying nature of market volatility and to identify the key factors driving these fluctuations. Our findings reveal that the COVID-19 pandemic triggered the most significant spikes in volatility, particularly during the early months of 2020, as uncertainty regarding the pandemic’s impact on the economy led to sharp market corrections and investor panic. Additionally, the study highlights the influence of macroeconomic variables such as GDP growth, inflation, and monetary policy changes on market behavior. The paper also explores the role of investor sentiment and market liquidity in exacerbating volatility during crisis periods. The results provide valuable insights into the dynamics of the Indian equity market, offering implications for investors seeking to manage risk and for policymakers aiming to enhance market stability. The study underscores the need for robust risk management strategies and proactive regulatory measures to mitigate the adverse effects of such volatility, especially in an increasingly interconnected global financial environment.