The Market Podcast | Coronavirus sell-off: Why you should shift from debt to equities in these volatile times

What a week it has been for Indian markets! Both Sensex and Nifty50 plunged to a fresh 3-year low breaking crucial support levels on the way down. The S&P BSE Sensex broke below 30,000 while Nifty50 breached 9000 levels.

But, have we reached a ‘Dooms Day’ scenario considering the fact the global cases of Coronavirus have crossed 200,000? Well, maybe not, but the pain is likely to remain for some more time, says Prateek Pant, Co-Founder & Head of Products & Solutions, Sanctum Wealth Management Private Limited said who has over 2 decades of experience in a ‘Market Podcast’ with Moneycontrol.

“We are in abnormal times, and I don’t think most of us have not seen this before as well. In my 25 years of experience – I have seen Harshat Mehta or the DotCom bubble, but the type of drawdowns which the market has seen in a short period of time is unprecedented,” he said in the podcast.

The current crisis is a confluence of three factors, explains Pant. Global equity markets including India, have taken further deep cuts in the week gone by as a confluence of factors play out – Crude oil price war, the spread of coronavirus and domestically the Yes Bank cookie crumbling.

Earnings will suffer is because there is complete lockdown across the world, economic activity has come to a standstill and many businesses are completely scared and impacted by this.

What should investors do now?

Considering the fact that people are sitting on massive losses across their portfolio be it mutual funds or equity portfolio, investors should not panic and discontinue SIP or systematic investment plans.

Historically, it is seen that equity as an asset class delivers or outperform over a period of time. Yes, we are seeing massive volatility at this point of time. “Avoid looking at your portfolio on a daily basis especially if it is a long term,” explains Pant.

Investors should stay composed and there is a possibility that investors' goal might also shift amid the recent selloff we have seen in the markets. But, the most important thing to focus on is asset allocation and move some money from debt portfolio to equities in a staggered way.

Why asset allocation is important because a massive amount of liquidity is going to come into equity markets, and Mr. Market usually discounts everything well in advance.

Pant further added that if investors don’t get into equity markets on time they will miss the bus because markets usually discount future events well in advance. A lot of great businesses are available at attractive valuation be in financials, consumption or pharma.

The valuations are looking attractive and this is once in a lifetime opportunity for investors because these are the valuations that were seen 8-10 years back.

(Tune in to the podcast for more)

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