Indian market hit a lower circuit in the first 15 minutes of trade. The trading is now halted for around 45 minutes. Selling was across-the-board, pushing both Sensex and Nifty below their crucial support levels.
The Nifty50 breached 8,800 levels for the first time since February 2017, a 3-year low. The S&P BSE Sensex plunged more than 3,000 points to hit a three-year low on Friday.
In this backdrop, as we have stated previously its best for investors to sit on the sidelines and wait for the dust to settle. Opportunities are there for active trading given the steep fall as there will be sharp recoveries. There is panic out there. That said, I think the developments and the way markets have reacted is a bit too much.
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Volatility will remain until markets believe that the peak of coronavirus (Covid-19) cases has been reached and that may be some time away. Globally, governments and central banks need to step in and bring stability and confidence back both for companies and investors.
So, what should investors do then?
If one is a trader, it is time to be active. If not, it is too risky to bottom-fish now. That said, we will get a V-shaped recovery in the markets at some point in time.
Andrew Holland is CEO, Avendus Capital Alternate Strategies
(As told to Puneet Wadhwa)