Analysing The Shifts in Bond Yields, Equity Returns, And Economic Indicators in India: Pre- and Post-COVID-19 Comparison

The COVID-19 pandemic brought unprecedented economic disruptions, reshaping global financial markets, and influencing the dynamics of bond yields, equity returns, and associated economic factors. This study explores the impact of the COVID-19 pandemic on bond yields, equity returns, and key economic factors in India, utilizing data from September 2017 to December 2022. The dataset consists of 30 observations from the months before the COVID-19 outbreak and 30 observations from the months after. The analysis incorporates variables such as 10- year Government Securities (G-Secs) and 91-day Treasury Bills (T-Bills) for bond yields, NSE Nifty for equity returns, and key economic indicators including the bank rate, inflation, Index of Industrial Production (IIP), exchange rates, Foreign Direct Investment (FDI), and foreign reserves. The study focuses on month-on-month returns, assessing the differences in bond yields, equity returns and economic indicators using paired t-tests. The results revealed significant differences in bond yields, equity returns, and economic indicators, highlighting the pandemic's substantial impact on the financial landscape. Multivariate correlation analysis is performed to investigate the relationships between these variables, followed by regression analysis to understand their interdependencies. The results reveal that post-COVID-19, bond yields experienced a significant decline due to accommodative monetary policies, while equity returns rebounded sharply owing to fiscal stimulus and increased market liquidity. The correlation analysis shows strong relationships between exchange rates, foreign reserves, and equity returns, and moderate correlations between inflation, bank rates, and bond yields. The regression results indicate significant shifts in these relationships postpandemic, highlighting the altered market dynamics. The findings suggest that economic factors such as inflation, bank rates, and exchange rates play a crucial role in influencing bond and equity markets in the post-COVID period. These findings offer valuable insights for investors and policymakers, supporting informed decisionmaking in a post-pandemic economic context