Let’s start with a quote being shared extensively on Twitterati-
“बॉटम बॉटम सब कहे, बॉटम बने न कोय! जब असल बॉटम बने, तो रोकडा बचा न होय!” ~ बफ़ेट कबीर
(Everyone in the markets is bottom fishing, nobody knows where the actual bottom is. By the time we reach the real bottom, there will be no cash left to invest with)
Markets have been falling mercilessly since past 20-25 days. Small caps and mid- caps which were just showing green shoots, are being hammered mercilessly with the Nifty and Sensex both falling together.
The idea of writing this piece stemmed from the panic that I see around us.
WHAT CAUSES PANIC
1. Corona Virus
China’s numbers are definitely fudged but there is still hope this would wear down due to summer season. Development of a vaccine in the upcoming few months might make things look up. If Corona is declared to be a pandemic, health would be on higher priority than markets and investments.
2. Yes Bank
I don’t wanna be that guy saying, “I told you so.” But here is what you can do now-
DO NOT PANIC. RBI WOULD NOT LET ANY DEPOSITOR LOSE A SINGLE PENNY. 3rd April 2020 is the last date given by RBI. Things should become normal before that.
A resolution plan has already been devised.
3. Global Markets
Markets in USA, Hong Kong, Europe, Germany, Japan have all lost around 10-15%. Uncertainty is so huge that US Markets flip a coin to determine a rise or fall. What’s worse is that their linkage to Sensex is visible in times of a fall but not during an ascent. Double whammy, for sure, but not a good one. Global trade is adversely impacted by a fall in crude prices, decrease in airline travel and a logjam in the export-import scenario.
4. GDP 4.7% growth for quarter 3
Does demonetization still haunt us? I guess it does. The financial sector, deemed to be the backbone of any economy is perceived as collapsing. Consumer sentiments are at multi-year low. 2008 is remembered as a better time than this. Real estate is at the lowest levels. The complexity of GST has not earned many admirers.
Is all hope lost? I don’t think so. There were high expectations from this government, but the turnaround in the economy remains a pipedream. There is a school of thought that debt cycles turn on their own and a political party does not have a role to play in it.
The silver lining to the drama is some realization in top echelons about policy failure and consequent loss of public trust. Let us hope that they focus on this area to redeem themselves. The only place to go from here is UP.
WHAT SHOULD AN INVESTOR DO?
- Selling at these prices is not advisable.
- If you are out of cash, hold on to quality investments
- If you have cash, keep buying the companies you want to in a staggered manner. Let’s say if you have Rs 100 to invest, invest Rs 10 at every 3-5% fall. Increase or decrease as per your capacity.
- If you can continue with your SIPs keep going.
- March 31 is round the corner. An ELSS looks better than PPF for your TAX SAVINGS AND INVESTMENT RETURNS. Just keep holding your ELSS with the same time frame as you PPF.
Be Patient. Be Positive. Invest in yourself (Tax- free and unlimited potential always).
Until next time.
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