Business Bureau :
After a spectacular run up from the past one year, the barometer of the economy -- Sensex -- has crashed by 1,707.94 points to close at 47,883.38 level on Monday. “Rising COVID cases has applied temporary brakes to the Indian stock market. Once the COVID cases come down the stock market could possibly witness a massive rally,” said CA Kailash Jogani while speaking to The Hitavada. He said that the second COVID wave has brought a surge in positive cases and the Government is considering another round of lockdowns in Maharashtra and other parts of the country. This has led to massive selling by investors in the market. The market would be watching how the Government handles and control the COVID situation.
Investors are anticipating the situation to worsen in the coming days. Currently, the per day case load in the country has crossed 1.60 lakh which could spiral up to 2 lakh to 3 lakh cases per day. “In such a situation, investor are advised to wait and watch till the COVID curve comes down before entering the market,” he suggested. Jogani said that the investors with long term horizon should buy specific stocks with good future earning potential. Investors should avoid F&O segment as the markets would be volatile in the coming days. He suggests investors to be selective and look at sectors like pharma, IT and e-com. Dr T S Rawal, a renowned economists said, “Long term investors should not panic and start selling. Instead investors should stay away from the markets for next few days as the market would be erratic. Let things normalise and buy on dips. Accumulate specific stocks and add to the portfolio.” He strongly recommends companies in sectors like pharma, infrastructure, FMCG and consumer durables. Anuj Badjate, Director of Badjate Stock and Shares Pvt Ltd said that investors should wait and watch as no one can forecast the market. Further fall is expected as market sentiments are negative for the time being.
Investors should watch the COVID situation for another 10 days and if things improve buy on dips. He said that the Indian growth storey is fundamentally intact. CA Varun Parakh, Managing Director, Kreo Capital Pvt Ltd said that the free falling market by over 3% on April 12 has taken a lot of investors’ wealth for a ride. In the current situation, he expects the market might show some short term downtrend primarily triggered by the lockdown fears, amid the rising COVID-19 cases. Also the depreciation of rupee, fall in the IIP Index and pulling out money by FPIs is more like salting the wound. It seems the rocket rise in COVID cases has reminded of the same times in FY 20 due to which the panic situation seems to be taking its grip. Markets are expected to show high volatility in the coming days. Investors may enter buy positions at lower levels and avoid short term trading, to curb the volatility.
CA Julfesh Shah, an expert on stock market said, “Any correction due to the second wave of COVID-19 should be used as an entry point,he said . Foreign investors are not so comfortable at the current levels and the unfortunate part is that due to the new wave of COVID infestations that we are witnessing in India, growth which is likely to play out over the next one year could be impacted, unlike what was looking like two-three months ago when daily COVID cases were reduced significantly,” he said. Another reason attributable for Monday’s crash was non-stop selling by the foreign institutional investors which added to the woes of Dalal Street. In last few sessions, FPIs have withdrawn a net of more than Rs 20,000 crore from Indian equities and have been net sellers. Shah expressed optimism about the market outlook given the lower interest rate environment and strong fundamentals. He said stock market valuations have been reasonable for some time, but expensive stocks have kept getting costlier. This crisis is a good time to invest in Indian bourses in lots and after duly judging the fundamentals of the scrips diligently, Shah remarked. However, bottom fishing should be avoided until the markets indicate fatigue on the downside. Any correction due to the second wave of COVID-19 should be seen as opportunity to accumulate in lots of fundamentally sound scrips, Shah concluded.