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161How can an Investor be Navigated during COVID-19May-04-2020

How can an Investor be Navigated during COVID-19

Blog by – Mr. Ameya Ranadive (Research Department)

Equity Markets – Is this a good time to Invest?

There are a lot of opportunities in the current market scenario but it`s imperative to select the right stocks for investments as there is a lot of volatility in the market. Being in such turbulent times it won`t be possible to catch the market bottoms so we here at Ajmera x-change are requesting our clients to take Investment advisory service that will help them invest in equity trading in a staggered format. Best way of doing this is dividing our Investments in 4 parts, 1st round of Investments can be done at current market levels and 2nd round can be done in a few weeks and some when the market starts to resume a Uptrend.

India’s Market Capitalization to GDP has fallen to 50% or lower levels, which presents us with great valuation benefits and investment Opportunities.


What will be the impact of COVID-19 on our economy?

The impact of Coronavirus will be far much more than the global financial crisis. Main reason for that being the consumption of people has been significantly affected by the economy being shut down. Various fiscal stimulus measures have been taken by the government and many more would come which would impact the recovery in markets and Economy as a whole. 

On the other hand, India will benefit from low oil prices. India will have to pay a very low rate to buy the same amount of Oil. Our current account deficit will fall sharply. There will be an impact on fiscal deficit as there will be less government income as compared to spending.


But is this the end of the world?


How can an Investor be Navigated during COVID-19


Currently the market is rightfully looking at the negative scenario in fears of trade disruptions due to lock downs. Unless a medical solution emerges, there is less likelihood of markets to settle down. Lower oil prices, lower interest rates, higher liquidity and lower trade deficit with China will not be discounted by the market till such time there is a medical solution for coronavirus.

There is a likelihood of a shift of manufacturing from China to other countries as the firms start diversifying their supply chain. India can welcome those companies to become part of the global supply chain. This can support India’s growth for years to come.The graph given above shows that there was a quick downward trend and the recovery thereafter, same is seen in our Indian Equity Trading markets.


Maximum impacted sectors?

Aviation, travel, hotel, multiplexes, retail, small and medium enterprises are worst affected. Banking which has large exposure to a single sector will be affected. Banks will face a problem of rising NPA,s. All sectors of the economy which have cost structures that are fixed, will have an adverse Impact.


Any opportunities that can be looked at?

It`s a good time to buy all industry leaders and make a good diversified portfolio by making investment in trenches by taking Ajmera x-change Investment Advisory Service as said earlier. HDFC bank, Asian paints, Hindustan Unilever, ITC, TCS, Infosys, Titan, Pidilite,Hdfc Life and BATA India. 

Pharma, IT companies and retail-focused banks are trading at fair valuations, while some large corporate banks, EPC(engineering, procurement and construction)  companies, oil marketing companies are currently undervalued.  

It is important to keep investment purpose and horizon in mind while approaching equity trading markets. In the short term, markets could face high volatility and could affect our portfolio but in the long run, our persistence and stock picks will help us build a portfolio that overcomes all risk factors and beat the benchmark with comfortable margin.


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