The way markets crashed on Friday, with the Nifty hitting the 10 per cent lower circuit is a global market -led panic. The rout was triggered by the sell-off in the global markets, initiated by a 10 per cent crash in Dow Jones Industrial Average, followed by the Korean markets freezing in the lower circuit.
The entire panic has been initiated by fears that the system to curtail the Coronavirus (COVID-19), across the globe, is misplaced. Truth be told, we don’t know when will this chaos will ease. Over 100,000 people across the globe have been infected by the virus and nearly 5,000 have died. India, too, is seeing a consistent rise in the number of cases. However, this doesn’t mean that we can’t control the outbreak. We need to put in stringent restrictions, possibly a lockdown, to curtail the spread.
However, investors must realise that this is a very short-term phase, and normalcy should come back to markets soon. Right now, investors should be inactive and should avoid any sort of buying or selling. For long-term investing, it is a precise time to wait and watch and start accumulating quality stocks via the systematic investment plan (SIP) route.
Vinod Nair is Head of Research at Geojit Financial Services. Views are his own.
(As told to Nikita Vashisht)