[Nitin Bhatia]

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Type of Recovery in Stock Market depends on the severity of the preceding recession. The stock market recovery is directly dependent on the performance of the economy or in other words the GDP of the country. The most common recession shapes or recovery types are V, U, W or L shaped recoveries.

In the V shape recovery, after the sharp fall, there is a strong and sharp rebound in the economy of the stock market. Normally this type of recovery happens when there is no impact on consumer spending/demand or income after the fall. This is the BEST possible scenario for the share market.

U shape recovery is longer than V type recovery. It normally lasts 2-3 quarters. There is a drop in consumer spending but there is NO impact on the income of the consumer.

After a severe recession, there is an L shape recovery. It might take years to recover. You will observe a flat line. The best example is the recovery of the Japanese economy. This is the worst-case scenario for any economy as there is a severe impact on consumer spending and income.

W shape recession is a double-dip recession but not so common.

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