Today before our markets opened, DOW futures was down around 4% , the HangSeng down 3%, the Shanghai too was down with only the Nikkei in green. However the SGX Nifty was a whopping 1000 points down- more than 11%. How do we explain this? In my opinion, the fall was a reflection of the World’s (meaning FIIs) presumptions regarding India’s capability in dealing with the Coronavirus crisis if it explodes here, as it has in other European countries. People are aware about our poor healthcare infrastructure and fear great damage. However it seems central and state governments across our country have also taken cognizance of the worsening situation and hence now there is a lockdown in almost all major districts with borders sealed, malls, theatres, gyms closed and police posted at every nook and corner to check unnecessary loitering by civilians. Hospitals have already stocked up and healthcare professionals are ready for any emergency. But with no antidote for the virus, there is fear and panic which explains the madness in our markets. We witnessed an historic fall in one single day today in both the indices. While there, of course, is a justified fear for safety, translating the fear into market valuation and selling everything in panic just defies logic. Typically if enterprises that do average business remain closed for two full months, they would incur bottomline and topline damages of say around 18-25% at most. However, the current drop in stock prices - down by 40%, 50%,60%, even 70% seem to be straight out of a bleak scenario where businesses are going or have already gone bust, banks have closed down and customers have defaulted on their EMIs – indeed a very scary picture.
Nobody knows how much damage this pandemic can cause to any country and in any market at this stage. So today's fall was more out of fear and apprehension that India will not be able to deal with this epidemic properly. The judgement was already out even before we had started. And I fear that this blanket sell-off will damage more households than the actual pandemic will and we won't even know it. Sad! FIIs too sold today but like they have been doing in the past few days, they bought index futures meaning they are looking at immediate recovery, within next 2-3 months. In such a scenario there is just no place for traders as far as indices are concerned. Relax and enjoy the free time you have if you can. Invest for long term if you have money because some great stocks are at mouth-watering levels and rest assured that you won’t regret this shopping.
All the best. Stay home. Stay safe. Don't panic, there is plenty of time and life ahead for trading
Nobody knows how much damage this pandemic can cause to any country and in any market at this stage. So today's fall was more out of fear and apprehension that India will not be able to deal with this epidemic properly. The judgement was already out even before we had started. And I fear that this blanket sell-off will damage more households than the actual pandemic will and we won't even know it. Sad! FIIs too sold today but like they have been doing in the past few days, they bought index futures meaning they are looking at immediate recovery, within next 2-3 months. In such a scenario there is just no place for traders as far as indices are concerned. Relax and enjoy the free time you have if you can. Invest for long term if you have money because some great stocks are at mouth-watering levels and rest assured that you won’t regret this shopping.
All the best. Stay home. Stay safe. Don't panic, there is plenty of time and life ahead for trading