Indian equity markets will react and behave in tandem with global trends until the pandemic reaches a manageable level going forward.
Equity markets environment is challenging and uncertainty is been played in markets, with difficulty of predicting what comes next a relief recovery or yet another month of volatile markets. So one should not expect any significant recovery kind of rally and we should keep in mind that volatility is going to remain for some more time as we are not yet out of the corona woods. The threat of earnings cuts, lower GDP numbers, lower GST collections and subdued IIP data will be a big hangover on the market in coming few months which will keep equity market under pressure and volatile. So in this kind of situation, there is no need to jump in and say it is a bottom fishing kind of opportunity.
Governments and policy makers across the world would come together with measures to help and manage the slowdown and get our economies back and running. This may take some time but certainly outcome would trigger markets globally.
Here is how we at MEHTA EQUITIES are looking at the ongoing scenario and what do we recommend to our investors/Traders?
Let us not panic and exit at current levels, as we will end up converting notional loss into real loss and regret after few quarters. It is a good time to move to quality businesses which you would assume to remain for next few decades or even centuries. Valuations of quality businesses have dropped significantly and provide a great opportunity to accumulate these wealth multipliers for the long term. We note that such significant corrections opens up equally significant investment opportunities as well as one should keep in mind that recovery will take its own time. Markets would be unpredictable at any point of time and one thing we have to realize that market volatility is inevitable and it’s the nature of the markets it to move up and down over the short-term discounting the visible event effecting economy.
For Investors:
We advise Investors should focus on phase wise investment strategy, as it is very difficult to gauge when will markets stand at bottom levels but given the favorable risk-reward situation investors need to take a long term vision and keep on accumulating high quality stocks at every such declines COVID-19 has meaningfully impacted the global economy and in order to counter the pandemic amid forecasts of a deep recession, G-20 nations have indicated they will be injecting US$5 trn into the global economy. All stock markets performance reflects the economic situation of country and the recent fall is already shaping up as the deepest dive on record for the global economy for over 100 years. Now everything depends on how long it lasts, but if this goes on for a long time, it’s certainly going to be the mother of all financial crises. But one thing is for sure: this is not permanent.
Indian economic growth has no exemption with the effect of COVID-19 due to weaker private consumption and a contraction in investments, and higher government consumption. Risks to the forecasting the effects would be tough, given that the COVID-19 outbreak in India is relatively low number and appears to be just beginning especially considering that India is the world's second-most populous nation with a population of over 130 crore.
Below are the sectors which can create new opportunities to build wealth
· Domestic focused Pharma.
· Insurance- Life as well as General Insurance.
· Technology -Digital Platform.
· Clean Energy.
· Retail FMCG.
We forecast an uncertain medium term outlook and long term outlook would be healthier when compared emerging economies.
Stay safe. Stay in. Stay Invested