The Coronavirus has stung financial markets globally so hard, triggering memories of past crises. However, it’s time to look ahead. Yes, the Sensex and the Nifty have plunged over 30% from their peak, but with equity investments, it’s more about winning the war than counting your lost battles. So it’s not yet time to jump ship, as the voyage with the market is a long one.

Taking a leaf out of Sun-Tzu (never mind the Chinese connection), here are some well-researched maneuvers from the Sharekhan Market Strategy Report: 2020, A Virus Story – Anatomy of a Bear Market that could help you endure the storm the Street is caught in.

1. Remember the past, but today’s different

The markets have seen deep corrections earlier too. During the global financial crisis (GFC) in 2008 and the post-dotcom bubble burst meltdown, equity markets plummeted across the globe. This time, the Coronavirus has sent markets into a severe tizzy. On a comparative basis, the markets could slide by another 15-20% to find a bottom at a price-to-earnings ratio of 11-12x seen in 2008. However, the markets seem to have hit a bottom on March 19 when the valuation on price-to-book value hit 2.3x as compared to a bottom of 2.2x in 2008 and the market cap-to-GDP ratio come down to 50% as against 45% during the GFC 2008.

2. Make careful moves – Do’s and Don’ts

While a falling market offers many low-hanging fruits, do not preferably go on a blind shopping spree. Know your risk appetite well before you loosen your purse-strings. More importantly, be patient and only park your money in stocks as a long-term investor and keep reasonable level of liquidity. Also, it is important to keep your portfolio risk-free by investing in diverse assets, while cleverly sailing away from the laggards to the leaders. There are some strict ‘no-no’s too. Avoid taking too much leverage to trade as failed bets could hurt. Similarly, avoid normally human biases like ‘Hope Trade’ and ‘Build False Hopes’. Lastly, half-knowledge is dangerous. Consult a financial advisor before making a move in a tumultuous market.

3. Find your safe harbour

In a bear market, where uncertainty rules the roost, you need to first ensure that you have enough money to invest in quality stocks for the long term. To match different risk appetites, we being you three distinct investment approaches – Safety First, Quality First and the Opportunistic Approach. Each of these offers different portfolio mixes, while ensuring a safe cash proportion. The Safety First portfolio parks 40% of its money in balanced mutual funds, while a fifth of the corpus goes towards SIP/STP in large-cap stocks. ~25% of money is invested in debt and gold for a dash of diversification. The Quality First portfolio is a carefully-curated defensive bets from the consumer staples, banking & financials, pharma and a few other segments. The Opportunistic Approach involves befriending volatility and bearing the near-term pain for handsome gains by accumulating quality stocks with a structural growth outlook.

4. You can take it SIP by SIP too

If investing significant sums is not your cup of tea, you can also opt for systematic investment plans (SIPs) in mutual funds. You could also begin a stock SIP to invest gradually in quality bets. In fact, history shows us that investors who would stick to systematic investing plan approach over the next 12-18 months would be the biggest beneficiaries in the next 3-5 years.

5. It’s darkest before dawn

Lastly, haste makes waste. So, do not jump ship in a hurry. It’s true that a bad spell in the markets is scary, but they have also bounced back significantly offering handsome returns after every crisis. At the start of the millennium, after the Dotcom crisis, the Nifty offered whopping returns of 405%, in the aftermath of the 2008 global financial crisis too, peak returns stood at 387%. What’s notable here is that the recovery was gradual, but it did occur each time. The moral, therefore, is to be patient and keep a close watch on your portfolio and believe in the good times.

So yes, the current fall in the market might be a good time to load your plate, but watch your (risk) appetite too.

(By Sanjeev Hota, Head Research, Sharekhan by BNP Paribas)