“Corona Se Daro na”
Dear Friends,
Last couple of weeks have been unprecedented in the World history. With almost
each and every country in the world having some case of this virus, the fear of
‘Carona’ has reached epic proportions and it has been declared a ‘pandemic’.
So far there has been no sign of any recovery or easing or any cure ..
History tells us, that every crisis has its solution. The world took its time but
eventually recovered, whether it was Asian Crisis, or the Gulf War or the Lehman
Bros of 2008.
On Similar lines, this crisis will also take its own course and get resolved and the
world will emerge better and stronger.
But till the time that happens, this crisis has the potential to destabilize the world
markets. With majority of the countries going in lock down mode, it will have major
economic impact.
Stock Market world over have crashed by 20% approx. Indian Markets have
crashed from 12K Nifty to 10K Nifty with potential of further major fall in the future.
The crash has been brutal and has taken everyone by surprise.
What Should an investor in MF Equity market do :
In my note of Sept 2018, I had specifically stated that those who are nearing their
goal and shall be needing funds in a year or two, they should sell and exit . I Have
the same opinion. Those who need the money in next year or two or so , they
should exit still.
Anyone having greater than that horizon should continue their SIP. In fact, the
recent fall has made the markets fairly valued and attractive. I am of the view that
the year 2020 is a very favorable year for investors. This is the right time to invest
even more in SIP mode.
I very strongly feel that our country shall emerge stronger due to following
reasons:
1. Our Forex bal is at record high of 480+ Billion USD.
2. The world will look to decentralize from China and India is poised to gain
maximum due to its huge potential and tax friendly laws for FDI.
3. The fall in Crude price from 65 USD to 32 USD will help the country save on
FOREX.
4. The aspirational youth, which consists of about 50% of our population , will
drive the consumption and the growth of the economy.
It is of prime importance that an investor must have long term view and patience.
After every crash, markets have recovered in due course of time. Allow me to
illustrate as follows :
- Year 1992 – Sensex down by 54% in a year and up by 127% in next 1.5 yrs.
- Year 1996 – 40% down in 4 years and 115% in next year.
- Year 2000 – 56% down in my 1.5 years and 138% up next 2.5 years.
- Year 2008 – 61% down in 1 year and 157% up in next 1.5 years.
- Year 2010 – 28% down in 1 year and 96% up in next 3 years.
- Year 2015 – 22% down in 1 Year and 25% up in next 7 months.
It is paramount that we keep focus on our long term goals and not get deterred by
these short term volatilities. Remember, downs are temporary and ups are
permanent. Indian Stock markets, in last 40 years, inspite of everything, has gone
from 100 in 1979 to 34000 in 2020.
Have faith, have trust – ‘This too shall pass’
With warm regards,
Samrendra Tibarewalla, CFP CM
PS: You are the best manager of your money. Please take informed decisions only.
Disclaimer : The author in no way will be held responsible for losses incurred on the basis of above re
commendations. The investors are advised to take independent decisions after verifying all facts.
FAQ: Navigating Equity Investments During the COVID-19 Crisis
Q1: Why has the COVID-19 been declared a pandemic and what is its impact?
The widespread reach of COVID-19 across almost every country, with no immediate signs of recovery, cure, or easing of the virus, has led to its declaration as a pandemic. This crisis has significantly impacted global markets, leading to economic instability and stock market crashes worldwide.
Q2: How have global and Indian markets responded to the COVID-19 crisis?
Global stock markets have experienced approximately a 20% crash, with Indian markets following suit, falling from a Nifty level of 12,000 to 10,000. This sharp decline, driven by the pandemic’s economic effects, has caught investors by surprise.
Q3: What should investors in mutual fund equity markets do in response to the market crash?
Investors nearing their financial goals and needing funds within the next year or two are advised to sell and exit the market to avoid further losses. Those with a longer investment horizon are encouraged to continue their Systematic Investment Plans (SIPs). The market’s valuation has become more attractive due to the recent fall, making 2020 a favorable year for investing more through SIPs.
Q4: Why is the current crisis considered an opportunity for Indian investors?
Several factors contribute to a potentially strong recovery for India, including:
- A record high foreign exchange balance of over $480 billion USD.
- A likely shift of global manufacturing from China, benefiting India due to its potential and investor-friendly tax laws.
- Savings on foreign exchange due to a significant drop in crude oil prices.
- A young and aspirational population driving economic growth and consumption.
Q5: How have markets historically recovered from crashes?
Historical data shows that markets have consistently recovered from downturns, often posting significant gains after crashes. Examples include recoveries after market falls in 1992, 1996, 2000, 2008, 2010, and 2015, underscoring the importance of maintaining a long-term investment perspective.
Q6: What is the key takeaway for investors during the COVID-19 crisis?
Investors are encouraged to focus on long-term goals and not be swayed by short-term market volatilities. Historical evidence supports the resilience of the stock market, highlighting that downturns are temporary and growth trends are permanent. Patience and a long-term view are essential for navigating through current uncertainties.