Stocks

Small investors make dip buying on recovery hopes

Bloomber June 24 | Updated on June 24, 2020 Published on June 24, 2020

The resurgence in Indian equities despite the economic impact from the still-spreading coronavirus has bewildered professional investors.

Mom-and-pop investors, though, are all in. They’re piling into beaten-down stocks such as financials, telecom and high-quality drugmakers amid expectations that Asia’s third-largest economy may recover faster than expected as it gradually unlocks from the worlds biggest lockdown.

Mirroring the rush of first-time investors who drove record sign-ups at US brokerages including Robinhood, India has seen about 1.8 million new accounts opened since March. The benchmark S&P BSE Sensex is down 14 per cent for the year even after rebounding from the worst sell-off since 2008.

The Sensex has rebounded 36 per cent from its March 23 bottom, as local policymakers and governments globally added stimulus to counter the devastation caused by the coronavirus. But there is a wide dispersion in performance — the banking sector is down 31 per cent year-to-date, while healthcare stocks have rallied.

“Blue-chip valuations look reasonable and we foresee many new investors coming into the market to take advantage of this correction,” said Nikhil Kamath, co-founder and chief investment officer of Zerodha Broking, India’s largest online discount broker.

Retail investors are pivoting toward cyclicals as these suffered the most during the lockdown. That underscores the narrative that this is about expectations that the worst is over. Valuations for auto, energy and metal stocks remain low versus the broader market.

Published on June 24, 2020

A letter from the Editor

Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Support Quality Journalism
New norms for order-to-trade ratio in algo trades