Markets are witnessing steep correction as there is no certainty with respect to coronavirus (Covid-19), which has become a global crisis. These are difficult times. What we can anticipate and pray for is that the number of infected people doesn’t increase domestically as well as on the global front, recovery starts happening for all the patients and slowly and gradually the effect fades off. It is only then we will be able to analyze the impact on the domestic as well as global economy.
As regards India, one positive thing is that the government and the Health Ministry (Ministry of Health and Family Welfare) has acted promptly. If the government is able to curtail the spread of the disease and cure people, then possibly we may not go into the phase which China, Italy, Spain and even the US are witnessing right now. Another positive development here is the number of people getting recovered. According to reports, all three old cases of coronavirus-hit patients in Jaipur have recovered.
That said, coronavirus will have an adverse impact on FY21 earnings. However, it is difficult to quantify it at this point in time. It should be noted that this crisis was something which the world has not seen before. So, it is unfair to expect the government to anticipate something which is unknown. One learns only when something goes wrong and I am glad that the government has acted in time, given the vast population that we have.
In the meantime, investors are advised to stay focused. If someone had an investment horizon of one or one and a half year before the market meltdown, they now should have two or two-and-a-half years' perspective, given the lag effect due to coronavirus. Large-and select mid-cap stocks present an investment-worthy opportunity but investors need to be selective here. Stick to the basics and don't be adventurous. Those who have surplus money for investment are advised not to invest their entire money at one time. They should stagger their investments over a period of two-three years.
On the macro front, India will benefit big time from lower crude oil prices. Brent, at $30 - $35 a barrel is a hugely positive for the Indian economy. Maybe, this will reduce the negative impact of virus as compared to what other economies will have to face.
Gaurang Shah is head- investment strategist at Geojit Financial Services. Views are personal
(As told to Swati Verma)