Second Wave of Corona and Your Investments

 “A market is the combined behavior of thousands of people responding to information, misinformation, and whim.” – Kenneth Chang

Second wave of corona is creating jittery in the society and the stock markets as well. Numbers being reported daily are frightening. And second phase of lock downs seems inevitable to many.

Data throws many option and thus multiple interpretations. India has seen highest spike in number of cases over last couple of weeks. In last one week alone India added over 13 lakh cases of corona, 62% hike over cases reported a week prior to that. Closest allies in number of cases are USA, Brazil & Turkey who reported 5 lakhs, 4.6 lakhs and 4 lakhs cases respectively during last week, where Brazil has shown negative growth with US & Turkey showing 4% & 17% growth in cases over week prior to that.

Another interesting fact is number of cases per million (ten lakhs) population of the country. India has 948, US 1502, Brazil 2147 & Turkey 4754 active cases per million of population as on date. Another interesting data is related to death due to corona. India reported 4326 deaths or 5 deaths per million of population over preceding seven days when compared to US reporting 5432 or 15 per million, Brazil reporting 20,568 or 94 per million & Turkey reporting 1562 or 22 per million of its population.

At present 202 countries are having corona patients with over 100 countries having less than 1000 patients in their country. So you can draw your own inference from various data presented above and the covid management in the country, its severity etc. Caution – this is past data and future is unknown. So while above analysis may give you some comfort as we are not that bad when compared to world or previous pandemics, we can’t afford to relax, we have to remain vigil and exercise all precautions while moving out of home or interacting with others.

What should we expect now – Couple of days back markets had shown frenzies due to rising cases of corona patients and fear of lockdown bringing economy to a halt. Though many states have announced weekly or night curfew and it may be extended to most of the country. What we feel that this time around even if lockdown is extended to more days and across places, there will definitely be impact on all economic activities but severity will not be as high as it was last year. And we had talked about ability of India & Indians to adapt very fast to evolving situation. Last year is testimony to this characteristic.

Debt Market – Should the situation prolong and impact earnings of the people, we might see an upward revision in interest rates. At least for small saving & schemes for senior citizens, if not for all. Inflation after some moderation has started rising again and is expected to rise for at least couple of more months. It may also impact interest rates going forward.

Equity Markets: In our post budget communication, we had advised you to invest major portion of equity allocation by May end. Soon we will start getting annual results of the companies which will be better than expected. This year also monsoon is predicted to be good. Corona situation will also be under control within a month or so. By June availability of covid vaccine is expected to be sufficient. So we expect markets to settle down by then and from July start a fresh journey.

So take advantage of market corrections and keep putting in money in small tranches. And if your risk appetite is moderate then invest in balance advantage or dynamic asset allocation funds.

Discuss your investment plan with your advisor or you may write to us for your investment queries. You may whatsapp your query to 995844770 or 9254673750. You may also email your query to info@investmentmitra.comor ajay@investmentmitra.com .

Happy Investing!

Team InvestmentMitra