Amid high volatility, investors need to be extremely cautious while making trading decisions and avoid any panic selling or buying of stocks.
Indian stock market benchmarks Sensex and Nifty have been reeling under pressure in the wake of the rising number of coronavirus (COVID-19) infected persons and deaths. Many countries including India, around the world have announced a lockdown in order to prevent the novel coronavirus. The 30-share index Sensex has tumbled 23 per cent so far in March while the broader Nifty50 index plunged 24 per cent from the opening levels of March 2. While Sensex and Nifty50 gained 8 per cent and 10 per cent, respectively, so far this week. Amid high volatility, investors need to be extremely cautious while making trading decisions and avoid any panic selling or buying of stocks, Jyoti Roy, DVP Equity Strategist, Angel Broking Ltd told Surbhi Jain of Financial Express Online in an interview. Jyoti Roy further recommended investors to stick to quality stocks at this point of time.
1. How long do you see this volatility in markets to continue?
The Coronavirus pandemic has spread rapidly all over the globe including the US and has made the market extremely volatile. The intensity of the current market fall is sharper than the fall during the global financial crisis in 2008 and a global recession is all but certain at this point of time. The current market fall has seen a sell off across all asset classes including equities, commodities and even bonds. However, we all are in the hope and expecting that the worst of the Covid 19 pandemic should be behind us in the next 2-4 weeks as Governments across the world are announcing measures to counter the pandemic.
2. What should be investors’ strategy while trading in the market?
We advise investors to be extremely cautious while making trading decisions during such volatility times and avoid any panic selling or buying of stocks. We recommend investors to stick to quality stocks at this point of time. We believe FMCG and select Pharma stocks will out-perform during these tough times and investors can look into gradually buying into these sectors.
3. Which sector seems to be well-positioned from a long-term investment perspective?
We believe that the current correction would provide a great opportunity to buy into quality names in the consumption space and retail focused private sector banks. We believe that these sectors will be amongst the first to bounce back.
4. Which five stocks you believe will benefit from the Coronavirus outbreak?
There has been a lot of panic selling at the market but there are few companies in the pharmaceutical market that are holding up well like IPCA Laboratories Ltd. To be honest, we don’t see any particular stock that is benefitting from this outbreak; however FMCG and healthcare companies will see relative out performance during these tough times.
5. What are the top sectors to watch and avoid amid volatility?
The stock market has been going through an absolute turmoil as the COVID-19 pandemic has slowed down economic activities significantly. Every day the situation is rapidly changing and there is very little that we can say with certainty at this point. But investors can keep a close watch on stocks in the FMCG, pharmaceutical, retail focused private sector banks and specialty chemicals sectors considering the current scenario. Investors can look to gradually buy into these sectors on every dip.