A Glimmer Of Hope
Every now and then the markets shine a beacon of hope amidst the carnage that has taken place in these unprecedented pandemic times. Any news that indicates the spread of the virus has been contained launches a strong bout of market participation, thereby shooting the indices skywards. This clearly reaffirms our belief and is an indication about the strong rebound potential stored within the system that is just waiting to be unleashed the moment there is relief from this dreaded pandemic. The market is continuously hooked to the emerging news, waiting in the wings to launch a bull rally on the slightest sign of positivity.
Honestly, how many of you felt on the evening of March 7 that you had missed the boat when you saw the market rally by 8 per cent during the day? Did you not feel that you should have acted earlier as it appeared the prices were running away and that you had missed the opportunity, yet again? Many a reader have written back to us appreciating our effort to instil that much needed confidence for an investor to buy in such dire times. They did. These are the ones who are and will continue to reap the benefit.
Meanwhile, all is not lost. The market continues to offer many entry opportunities. Do stick to a discipline of deploying funds evenly across the coming weeks irrespective of market volatility or news-driven hopes. Now that the virus has hit across all countries and has created panic everywhere, the economies are grinding to a snail’s pace and oil prices have taken a hit owing to missing demand. Do understand that all this has already been discounted by the market and is reflected in the current prices.
This means that any negative news or information regarding these factors will not affect the market. For example, if one was to believe that the markets will fall when higher unemployment numbers or lower GDP numbers are announced then they are mistaken. In fact, the markets may rise because they are already expecting such bad numbers to come out. So, stop timing. Start or continue to invest across the coming weeks in a disciplined manner.
We think this pandemic experience is going to be an inflection point for a new world post recovery. The realisation, the experience, the fragility of life, the power of nature over mankind – such factors will infuse a new thought process in the system, altering the course from where the world was headed earlier. People will experience and realise this in their own personal way, but collectively it will impact the society, which we think will eventually lead to a better tomorrow.
From a market perspective we have tried to capture this aspect in our cover story that talks about revisiting portfolio alignment in the current crisis situation. We have emphasized the fact that under-owned stocks and sectors may now be in demand. We have also come up with some recommendations that we think will help you beat the markets. It is a foregone conclusion that the bear markets are untouchable. In our special story we find that bear markets create some of the most profitable bounce-backs. In our other special story we have studied how the gap between large-cap companies and small-cap companies is widening. Some insightful observations should make it an interesting read.
To sum it up, this fight against the pandemic is going to be a marathon rather than a sprint. We are preparing for the long haul and advise the same for you all too. Most importantly, do not miss out on capturing the opportunities available during this period. Stay tuned, stay disciplined. Together, we will come out victorious, and wealthier.
RAJESH V PADODE
Managing Director & Editor