The market is pricing in uncertainty and the uncertainty will continue till the core issue, which is what we can do about the coronavirus, is not addressed, Somnath Mukherjee, Managing Partner and Head: Investment Advisory and Strategy, Products and International Business, at ASK Wealth Advisors told Moneycontrol in a special podcast ‘D-Street Talk’.
The solution will not come from the world of finance, it will come from the world of science, he said, adding that while the monetary measures and the interventions of governments and central banks will help mitigate the impact of coronavirus on the economy, fundamentally the risk appetite will be bolstered only when the picture gets clear on how the issue of the pandemic is addressed.
"We expect the volatility to continue in the next days and weeks to come," Mukherjee said.
The last time the market had hit its lower circuit was in 2008. In terms of the market panic, it was a similar year to 2020. However, the year 2020 is different as far as the crux of the solution is concerned, Mukherjee pointed out.
"So far, there is a lot of chatter around the tools that were used in 2008. The solutions tool kit is different this time. Therefore, the endgame may be the same but the path will be different," he said.
Mukherjee said it was not a time to make a complete exit from the market.
"It is absolutely the wrong time to exit the market because investors are probably sitting on a 15-20 percent mark-to-market losses on their positions. If somebody is already over-allocated to equities, then maybe a little money off the table is ok," he said.
Mukherjee emphasised that those sitting on the sidelines waiting for the right opportunity to invest, this is their time to start investing slowly.
"This is not 'sell your house and invest' time, but this is certainly the time to make an entry in the market," he said.
(Tune in to the podcast for more)
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