COVID-19-related Uncertainty, Investor Sentiment, and Stock Returns in India

The Indian stock market witnessed a sharp recovery in the post-COVID-19 period owing to the sweeping investor enthusiasm. The event studies show that the 2020 lockdown and announcement of the first fiscal package had a significant impact on the stock returns. The impact of other events like the first COVID-19 case, second fiscal package, beginning of the vaccination drive, and the second wave was insignificant. Our estimates also show a significant impact of investor sentiment on stock returns, except during periods of extreme volatility. Further, the stock returns are positively related to oil price and negatively related to the exchange rate.