Abstract:
The paper aims to evaluate the short-term impact of the COVID-19 outbreak and the influence of the other external factors relating to COVID-19 on the Colombo Stock Exchange (CSE). This study adopts panel regression technique to examine the share price behaviour during the COVID-19 outbreak and the influence of the other external factors relating to COVID-19 first and second wave. The share price and other related information which is available in the public domain are collected for this analysis. COVID-19 outbreak was a disastrous but a novel situation in Sri Lanka. The impacts of the pre- and post-lockdowns were different. Initial lockdown due to the first wave of COVID-19 had a detrimental impact on the stock market which led to substantial panic selling eventually leading to market closure, however, the second lockdown had not led to a detrimental impact on the stock market. The findings of this research would act as a guide for investors to understand the market sentiments and reactions during a pandemic and disastrous event. This research contributes to the literature on COVID-19 and various other studies evaluating the impact of stock market reaction due to COVID-19.
