Business Bureau :
THE unprecedented rise in COVID-19 cases has severely affected the Indian stock market. On April 30, the Sensex witnessed a massive sell off and dropped by 983.58 points to close at 48,782.36 level. “The share market is expected to be volatile for the next few weeks until the COVID-19 cases come down. For investors every steep fall is an opportunity to buy quality stocks,” said CA Dr T S Rawal while speaking to The Hitavada. The second wave of COVID-19 would not be as severe as the first wave that started last year. The situation was different during the first wave as there was total lockdown of the economy.
The current lockdowns in different states will have temporary affect on economy, he said. “In India people tend to react to a crisis instead of preparing and planning for it. With the vaccination process underway, availability of oxygen and hospital beds things will improve soon,” he said. Apart from this, April GST collections at Rs 1.41 lakh crore are the highest so far in a single month. This shows that the economy was robust before the second wave lockdown. “Only if there is sudden spurt in COVID-19 cases the stock market could give knee-jerk reaction and witness fall of 10 per cent to 15 per cent from the current levels,” he pointed out. Dr Rawal suggests that investors should buy on big dips and buy quality stocks. He advises investors to look at automobile companies as they huge pent-up demand. Also, pharmaceutical, FMCG and steel companies. CA Kailash Jogani said that the investors should follow a wait and watch strategy. He advises investor to let things improve till June quarter and then buy quality stocks.
Currently there is uncertainty on when the COVID-19 cases would decrease and the lockdowns open up. Most company have crossed fair valuations and are on the higher side. He is confident that the markets would see another 5 per cent to 10 per cent correction from current levels. He is positive on IT, pharma and metal sectors. Anuj Badjate, Director of Badjate Stock and Shares Pvt Ltds said that spike in COVID cases and lockdowns have temporarily affected the markets. He expects the Nifty to fall to 14,300 level. Looking at the record GST collections for April at Rs 1.41 lak crore points to fundamentally sound economy.
He is bullish on banking, NBFCs, pharma and metals stocks. Market expert CA Julfesh Shah said the indices in the following days are expected to be driven by dual factors - results and further restrictions on account of rising COVID cases. Volatility may also remain higher as markets are asymmetric in nature. Some good news can move the market to some extent but any bad news can turn to be a big negative given that we are trading at frothy valuations. The tug-of-war between the bulls and bears will continue in the next week too and there can be mild corrections in stocks which have already run up because of their results. Long term investors can continue with their investments in fundamentally strong scrips in a staggered manner. Investors are advised to stick to their equity allocation strategies and increase weight on every correction in quality stocks, added CA Shah. CA Varun Parakh, Managing Director of Kreo Capital Pvt Ltd said, “In the last 15 days, wherever there have been local lockdowns, businesses have been affected because point of sales have been closed, thus Q1 results won’t be encouraging. But looking at the way market is maintaining the levels, there might not be any major correction in the market.
Also the GST collection touching all-time high indicates the business liquidity is decent enough. However a close eye needs to be kept in the near-term market reaction considering the recent state elections results. Any correction might be a good opportunity to buy at dips for long term investors. If investors’ focus on the quality of business, margin of safety in valuations, and an optimum asset allocation then huge wealth can be created from here. Money will continue to flow into emerging markets which will benefit mid and small caps. Positive on banking and metal sector, he further added.