There is saying in the investment markets: “There is always an investing opportunity in any market condition.” However, if we take a look at the current market situation it really is difficult to convince oneself on identifying any investment opportunities. The global markets are spooked and the panic is widespread even as the US and Indian benchmark indices take a free fall, recording the biggest single downward spiral, in absolute terms as seen in table 1. What is disturbing the markets is known to most market participants but what is not known is the extent of damage this whole motley of factors is going to cause and for how long the ‘risk off ’ mode in the investing world will exist.
It does look like the crash in crude oil prices and the economic and political repercussions that it may have on global markets is a bigger concern for investors than the spread of the coronavirus. It is not that the crude oil prices have never crashed before; it’s just that the triggers behind the fall are worrying the markets. In 2008, the crude oil prices touched a low of USD 32.40 per barrel. Ten years ago, the slump was attributed to demand side problems. In 2016, the crude oil prices crashed again and touched a new low of USD 26.05 per barrel with the fall attributed to supply side problems. The recent slump in crude oil prices, however, is attributed to not only the demand and supply hits but also to the unprecedented price war triggered between the oil producers.
Doubts and Fears
This story is from the March 16, 2020 edition of Dalal Street Investment Journal.
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This story is from the March 16, 2020 edition of Dalal Street Investment Journal.
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