Connect with us

Hi, what are you looking for?

Share Market

Indian share markets rising amid 2nd COVID-19 wave: Is sharp correction on cards? Check investment strategy

Financial Express - Business News, Stock Market News

stock markets, COVID-19, investment strategyWhile small traders and MSMEs are definitely going to be impacted, the market and category leaders shall remain largely unaffected. Image: Reuters

By Manish Jain

The second wave of Covid-19 hit us like a tsunami. However, the good thing is that just as quickly as it had risen, it seemed to be ebbing. However, a large part of the country has been reeling under lockdown and surely there would be an adverse impact of the same on earnings and economic growth. Combine that with the rising global commodity prices, fueling inflation concerns, and it makes for a potent combination.

The key question that comes to mind is, why are the markets rising the way they are? Are we all missing something or are the indices priced wrongly? Are we in for a sharp correction? The second question as an investor is – what should be the investment strategy now at these levels?

Taking one step at a time. Why are the markets in such a robust shape? We believe here are some of the key reasons:

A) Forward-looking view: While we as human beings wait for a situation to play out and often judge it by the present circumstances, markets are always forward-looking in nature. It is here that we as investors often go wrong. While the second wave may have hit us hard, the point is that it is ebbing fast and shall be soon a distant memory, leading to a massive V-shaped recovery.

B) Human vs economic impact: While the human impact of the second wave has been quite tragic and catastrophic, our belief is that the economic impact will be limited. Essential services, manufacturing industries and supply chain all continue to work quite well. Our sense is that India’s GDP growth can still clock in a good 11% growth in FY22, hardly a couple of points shaved off the top. This in itself is quite a reason to cheer.

C) The K factor: While small traders and MSMEs are definitely going to be impacted, the market and category leaders shall remain largely unaffected. They shall not just survive but thrive, gaining market share from unorganized players, but also smaller organized players. So, invest in quality “Good and Clean” companies and you have a winner at hand.

So while we have established by now that markets are in robust shape and quite logically too, what remains to be answered is what should an investor be doing?

We do believe markets shall remain in a robust shape and hence lots of money-making opportunities in the coming couple of years. However, wise would be a strategy to choose the sectors and companies correctly. We believe consumer discretionary, banks and chemicals are some of the sectors to watch out for. As for the companies that you choose, please look for leadership, balance sheet strength, and all the usual Coffee Can traits.

(Manish Jain is Fund Manager at Ambit Asset Management. Views expressed are the author’s own.)

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Click to comment

Leave a Reply

Your email address will not be published.

You May Also Like


Cybercriminals Adopt the Blockchain to Broadcast confidential Messages A group of analysts from SophosLabs represents that programmers working the crypto-jacking malware, Glupteba, have been...


PUBG unban in India soon as PUBG Corp. Will The Government Of India Unban PUBG? PUBG Mobile was Ban in India, PUBG organization has...


A standard method to execute Bitcoin could be powerless against double-spending, the new examination has found. Blockchain sleuths at ZenGo, a wallet startup, have...

BlockChain News

HDD mining, also known as “storage mining”, is a process of obtaining cryptocurrency based on hard disk memory. Compared with traditional POW mining, hard...