Markets & Covid 19 Battle Continues

Whether to invest or not in the current crisis is a question faced by most investors. However, the uncertainty is subsiding and the markets are already showing signs of bouncing back to the normal even though it would be premature and hazardous to say that the bottom has been reached. Yogesh Supekar explains how best one can build a futuristic portfolio after discounting the damages to the industry and the economy while the DSIJ Research Team share their top ‘buys’ in the current market environment

- Yogesh Supekar

March 2020 will forever be remembered by market participants not only because it saw the steepest fall ever in a single month, thus wiping offa gigantic amount of wealth for investors, but also for the kind of maturity that has been shown by domestic investors in India. Investors did not panic in spite of the steep sudden fall in stock prices. FPIs exited markets in March in record numbers. However, one can say that domestic investors could absorb most of the selling during such an unprecedented panic situation. This is something the investor community can take lot of positives from.

That said, if the FPI selling continues and the market finds a new bottom and continues to be dragged down slowly, it has the possibility of frustrating the investors and there could be redemption pressure in mutual funds which may further aggravate the matter. But that situation is unlikely. The most likely situation would be that we are close to the bottom and there could be a solution in front of us to tackle the virus as we head into H2. In fact, H2 may witness broad-based recovery and the stock prices may gain sensing such a recovery.

Says Alok Munot, a long-term investor: “Forget recovery and growth. In general, the stock prices may recover sharply even if the market shows signs of stabilising and consolidating. The sharp fall is too much to digest. But what this sharp fall has done is that it has created opportunities like never before.

Now it is up to us whether we can grab them and how much can we profit from them. There are too many variables to consider and it is impossible to catch the bottom. It looks to me that if I invest now it is difficult to go wrong in the equity markets.”