Another Opportunity In The Offing

Another Opportunity In The Offing

Not much has changed since having penned the last editorial. The pandemic continues to outweigh any other topic of discussion. Nonetheless, over the last week, the Sensex has held above 30000 and this should have come as a breather to many. Another fact that may be counted among the few and far happier moments is that the world suddenly has surplus oil, which, ironically, is creating a storage challenge now! Yet, this development is sending jitters across the business and economic pundits. Where is the demand?

Meanwhile, the annual FY20 results of some of the companies, now made public, appear to only show little distortion owing to the pandemic as this global crisis has surfaced only at the tail end of the year. However, an important point to note is that the same companies are shying away from providing forecasts as the current unknown does not seem to offer them any visibility of the road ahead. In fact, for most of the business enterprises, the annual budget planning for FY 2020-21 has gone awry already as the entire playing field has changed. The question is now more about sustenance and being tactical rather playing out any strategies.

With a lot of restlessness brewing in the world, there is pressure on many countries to relax the lockdown. This upsurge, along with the mindset for damage control to the economy, is making countries open the restrictions early. However, do note that with no vaccine in sight and with herd immunity not having kicked in, not to forget the fact that many people are asymptomatic carriers, this is only going to create a relapse and a huge spike in infections across the globe. It could quite be the second coming! This is going to again impact the markets or let us say optimistically provide another buying opportunity in the markets.

While this is a scenario most likely, we at DSIJ still stand by our guidance given earlier, suggesting investors to not time the bottom and to continue spreading their investments over 16 weeks in an even phase. Do follow it as akin to a medicine course. On the sectoral front, pharmaceuticals, healthcare, agriculture and telecommunication appear to be at the forefront and are likely to hold their lead for the coming quarters. A tip for moderate to aggressive investors: keep an eye on the banking sector. But before you jump to any conclusions, we recommend you to read our cover story on the banking sector in this issue. The said story talks about the pros and cons of investing in banking stocks. Investors must keep an eye on asset liability mismatch when it comes to financials and banks. That is why banking on leaders makes more sense now than ever.

Further, in our special story we have explained what one can expect from insurance companies. The insurance sector is in an exciting phase as the crisis presents both heightened risk as well as growth opportunity. Do look at our only pick in the sector. Our other special story discusses the benefits of booking regular profits in markets and having an ‘exit’ strategy as against adopting a ‘buy and hold’ strategy. Our observations can be used to define exit strategies. Do share your feedback with us. This war against the pandemic will be long-drawn but we will come out of it victorious and wealthier! 

RAJESH V PADODE
Managing Director & Editor

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