Stock Market crashed due to CORONA pandemic: What Retail Investor should do..?

Severity of Fall in stock market and Answerers for the questions frequently asked by Retail Investors.

  • 04th March, 2020

Hello everyone. We hope you all are healthy and fit to win the battle against CORONA virus. The world is under threat from COVID-19 and the world’s economy is at risk of melt-down. Many things have happened 1st time in the History of INDIA and world. The country like INDIA has been locked-down for 21 days, Global trades and deals are almost ZERO, Developed countries are under saviour effect of COVID-19 and till now there is no invention of any type of cure of COVID-19.

Things have changed since February 2020. In February 2020 Nifty was at 12300 and in March 2020 it has tested a level below 8000. What a crash...!!! This is the fastest crash in global market in the history. And all credit goes to COVID-19.

The crash of 2008 is due to financial crisis. This time, it is due to Pandemic which may trigger a financial crisis. The most horrifying and dangerous phenomenon of the current crisis is “UNCERTAINTY”. No one know what is going to happen and how to tackle them, we said no one....!! Due to this uncertainty, puzzle of financial stability remains unsolved.

  1. How long it take to start a normal routine life..?
  2. How badly economy (micro and macro) is going to hit..?
  3. How large and what type of stimulus package is sufficient to revive the economy..?
  4. What is the attractive valuation of the stock..?

Above 4 questions are unanswered till now and hence pick the good quality stocks at attractive valuation is difficult as their earnings will remain uncertain. Now, we come straight to the point. What to do now...??? Should you buy or wait..?? If your time horizon (investment period) is-

  • Less than 6 months- Stay away completely.
  • 1 year- Invest with 30% of total surplus amount and exit if you found 25-30% return.
  • More than 1 Year- Find low debt, high growth business and invest like SIPs, i.e. invest 20% of surplus, then if you found any dip then add more quantity with other 20-30% and so on

Other some FAQs and our view-

  1. Should I stop my SIP..?
    • No. You should continue with your SIPs. This is the worst time to stop SIP.
  2. Should I redeem Mutual Funds..?
    • No. This is the worst time to redeem money from Mutual Funds.
  3. Is it the right time for lumpsum investment in MF..?
    • Yes. You should invest 30-40% of your surplus savings as lumpsum. 8000 level of Nifty is an attractive level to add 30-40% of your savings into stock market (either in good stocks or in Mutual Funds).
  4. What about ELSS for FY 2020-2021..?
    • Our view is - Add lumpsum amount instead of SIPs of ELSS for FY 2020-2021.
  5. What is the bottom of the stock market..?
    • No one can say that. And you should not waste your energy to predict the bottom of the stock market. Wait for market verdict.

We hope, the article will help you to find the answers of your questions. Invest with caution and stay earned.
Do the business and Business will reward you.

Stock Market Business