Indian Market update and Investment Recommendation

The Indian equity market is in a bad phase and this is the most difficult period for investors in the stock market. The benchmark indices Nifty 50 and Sensex have plummeted significantly in the past one month.

Both the indices Nifty50 and Sensex are down 21.4% and 21.6% respectively from March 02, 2020- April 08, 2020. Fear of worldwide slowdown due to the aggressive spread of coronavirus (Covid 19) disease has affected investors’ confidence.

Currently, as per the media reports, the number of cases of the coronavirus across the globe crossed the 1.4 million and the global death toll is around 83,200. The death toll in India has risen to 164 and the number of cases has crossed 5,000 mark. However, the cases can further rise in India as well as at the global level because no country in the world is successful in finding vaccine for Covid 19 disease. Due to spread of Covid 19 India could face a major slowdown in its domestic numbers. India’s GDP growth is expected to fall by ~3% as per the media reports due to pandemic. However, to control the spread of Covid19 and to minimize the economic and social impact, the Indian Government has announced 21 days lockdown.

Sector Impact of Covid 19 spread

The sectors which are going to be worst affected due to this Pandemic are banking, automobile, tourism, hospitality, aviation, transportation and restaurant businesses. Most of these sectors are forced to halt as their operation as India is heading towards stage 3 of coronavirus outbreak.

Source: Ace Equity, NSE
# Data from March 02, 2020 to April 08, 2020

Investor’s current reaction in the falling market

After, witnessing such a huge fall in the market, most of the investors are rushing to liquidate their portfolio and book loss in a view that market will fall further. However, selling the portfolio in a falling market is not the right approach.

Recommendation

This is the best time to build your portfolio to get the superior returns over next 3-5 years. We expect Pharma and FMCG to be least impacted so on safer side and financials is the other sector which is quite attractive valuation wise. Investor can consider the following stocks for investment purpose.