HYDERABAD: If reports are anything to go by, world share markets are likely to remain volatile at least until the coronavirus scare subsides. Though global indices saw a bloodbath last week, stock market watchers say the crisis presents an opportunity for investors to buy good stocks, even if their prices are hitting the skids. “These are the kind of opportunities when people should buy. Unfortunately, investors buy after markets go up. But the problem is if you buy now, it’s quite possible in, say two days, it’ll (markets) be minus 5 per cent as no one knows where the bottom is. But that’s how you gain in markets. If you are a value investor with a long-term view, now is the time to load good companies. One may want to avoid those firms with super high exposure to China at this point, but rest of the stocks, people should buy and keep buying regularly. Importantly, investors should go long,” says Prasanna Tantri, Assistant Professor, ISB.
Last week, global markets saw their worst since the depths of the 2008 financial crisis on fears of coronavirus becoming a pandemic and trigger a global recession. Several markets including Japan’s Nikkei, Hong Kong’s Hang Seng, Korea’s Kospi and Shanghai composite indices saw their worst week since 2008. Indian benchmark indices too saw a bloodbath with Sensex alone shedding as much as 1,450 points on Friday. If investors globally are estimated to have lost over $5 trillion in value, Indian investors’ wealth shaved off as much as Rs 5 lakh crore in just one trading session. During such times, investors are conditioned to positively respond with dip buying, but going by the rapid crash in benchmark indices across the world, it appears that fewer call options are landing with the brokerages.
“It’s probably the right time to be an investor in the markets despite the gloom and doom about coronavirus and economic slowdown. We have withstood many such virus worries including SARS and Ebola in the past,” said Amit Gadre, SEBI-registered investment adviser. He added that normally, now is the time to sit back, observe and instead of scurrying, one should continue to add, be it their systematic investment plans or investments through mutual funds. “Start nibbling the stocks you’ve identified to buy. Slowly and steadily build your portfolio. There are and will be dry spells of negative returns. You won’t see good years in long-term investing without going through bad years,” reasoned Gadre.
With new infections reported around the world now, US investment bank BofA cut its world growth forecast to the lowest level since the peak of the financial crisis, and ratings agency Moody’s said a coronavirus pandemic would trigger global and US recessions in the first half of the year. Still, analysts believe investors can be bold. “The thing about markets is, people are sitting on profits. We have had a good rally, before the crash and even mid-caps have started rallying and investors would want to sell profits. Nobody knows what the real damage is and if it will be a one-quarter issue. Still, for investors with long-term plans, need not panic and should buy more,” said Prasanna.
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