Q. A volatile week for Indian markets! But, the good part is that we bounced back from the swing low of 7,511 – thanks to measures taken by the US Fed as well as our own government to help the economy and citizens in these tough times. What is your take on the market action?
A. A roller coaster ride from the last weekend ended almost on a flat note where the week begins with a black Monday but then the market formed a near term bottom at 7,511 levels for a very strong pullback rally which paused after the exact move of 20 percent.
The major problem of the coronavirus (COVID-19) is still persisting where the current bear market rally was on the back of major stimulus announced in the United States and India, therefore, a real test of this rally will be in the next week.
The real test of the low will happen in the coming week as major announcements have already happened, and now the trend in new cases of COVID-19 will dictate the next trend of the market from here.Q. After registering a series on series fall of more than 25 percent in March, what is the sense you are getting for the April series. Do you think we could hopefully close in the positive – what does the data suggest and any stocks which investors should watch/avoid? Have we made a bottom around 7,511?
A. It is very tough to make a call for April series after a brutal fall in March series because there are still lots of uncertainty about COVID-19 where the market has discounted almost worst-case scenario including a lockdown of 21-days. But if the situation further deteriorates from here then the market will again adjust itself in the downside.
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We can say that the April series is going to be very choppy with moves on both sides, unlike March series where the market has fallen vertically.
If we see some improvement in the curve of new cases of COVID-19 especially in the US and India then we can say that 7,511 is a bottom for the market otherwise one more move on the downside cannot be ruled out.
In terms of stocks -- healthcare and pharma stocks are looking very lucrative because they will have face any major impact of the lockdown while governments around the world will come with a higher budget for the healthcare sector in the future.
Some public sector utility (PSU) stocks are also looking very attractive as their current dividend yield is much higher than the risk-free rate of return.Q. What is your take on the package which the government announced the week gone by including that of the Reserve Bank of India (RBI)? Do you think these are enough to cushion the economic impact of COVID-19 on investors and citizens?
A. The government came out with a relief package for the poor while it may come out with a stimulus package for the economy in the future.
If we talk about RBI’s measures then we can say that these measures will definitely help in the stability of the financial system and it will also help the financial sector to deal with any liquidity problem.
All measures will be helpful for the economy but the situation of COVID-19 should not deteriorate from here otherwise things will become tough for the overall economy.Q. How is the month of April likely to pan out for investors? Do you think we could well get past 10,000 on the Nifty?
A. As I said it is tough to make a call about April month but Nifty definitely can come above 10,000 levels if the situations in front of COVID-19 improves from here because valuations are very attractive at current levels.
If Nifty manages to cross 10,000 levels then we can say that the bear market has been over and it is the start of a fresh bull market.Q. Any three to five stocks which look like good buys amid the announcements made by the government?
A. If we talk about recent announcements then it is clear that government is caring about the poor. Hand-outs to the lowest sections of society may result in higher off-take of consumer staples, therefore, FMCG is the sector which may outperform the market as it is also comparatively less impacted by lockdown in the country.