The stock markets have been performing impressively well with many stocks touching record highs even as the global economy continues to face disruption.
By Palka Chopra, Senior Vice President, Master Capital Services
The stock markets have been performing impressively well with many stocks touching record highs even as the global economy continues to face disruption. Though there was a period of uncertainty in the initial phase of pandemic outbreak which hit the investor sentiments really hard, the market has shown some spectacular recovery.
Stocks are Booming
A year after the pandemic outbreak, stocks have regained their position from the lows and the market is at its all-time high. The market rebound has been more surprising than the market fall. The recovery is powered by supportive government policies as well as booster engines of blasts of fiscal spending and easy monetary policy at global level.
The times are good to increase your investments if your asset allocation plan allows it. Some investment options are safe considering the present scenario and at the same time, have the potential to give you good returns in the future.
One View on Investing during Uncertain Times like Coronavirus
It is important for all investors to leverage this time as an opportunity to review their investment portfolio and their financial goals. Investors should adjust their contribution amounts into various asset classes from time to time in order to take advantage of the market volatility. Their portfolio needs to have a good amount of diversification.
The government is open to coming out with more measures to boost the economy, hit by the second wave of coronavirus pandemic. The ongoing government measures are expected to give further push to the markets. With a strong commitment to game changing reforms and their successful execution, we can expect the market to continue yielding positive outcomes in times to come along with economic recovery.
Therefore, it is wise to attentively look at the comparative performance of India and other equities as asset prices are being driven by global liquidity.
Sectors to Back during Current Situation
A very few sectors such as healthcare/pharma and IT outperformed others in 2020 in the wake of the pandemic and many others underperformed. These sectors continue to perform well even in 2021 and many other stocks have joined the booming market. The present market scenario is beyond expectations with a stark difference existing between stock market and economy. As investors explore safe investment options, they can invest in stocks of top performing sectors.
Investors need to choose sectors that have good market share, good growth potential and consistent profitability. Some of the safe sectors during the current scenario are Healthcare, IT, FMCG and Telecom. However, sectors including Hospitality, Aviation, Banking and Automobile have not shown promising growth sentiments ever since the coronavirus outbreak.
Talking from an investment perspective, the people who have long-term financial plans and own well-diversified portfolios are much better positioned. Even the ones who have lost their incomes but have a financial plan will have a much easier time bouncing back from the impact of the initial phase of the pandemic.
The present situation calls for determination to keep going and stay on track for your financial goals and now is the time to actually invest some time in making a financial plan if you still don’t have one.