Skip to main content

Takeaways from PM’s Address Today & Your Action Plan

Image
By

"Remember not only to say the right thing in the right place, but far more difficult still, to leave unsaid the wrong thing at the tempting moment" - Benjamin Franklin

All of us have just finished hearing out our prime minister’s address to the nation. If I have to sum up his speech in three words, it would be ‘Adversity Offers Opportunities” and he seems all ready to create and encash the opportunities out of this corona crisis.

He announced that government will pump in 20 lakh crores into the economy to ensure that it fires on all its engines and grow exponentially from here on. His focus is not only on becoming self-reliant but also on revival of SME sector which is the largest employer of the workforce. During his address mention of Khadi should give indication the preference area for the government’s stimulus package.

While we wait for the Finance Minister to detail out the complete package and read the fine prints how exactly it will get rolled out and which areas will benefit more, let’s contemplate how social situation and markets may unfold over next few weeks. First of all we believe that complete package may not be announced in one go but will be announced industry or sector-wise over next few days and further on:

Corona Situation

Number of corona infected persons have crossed 74,000 of which 24,000 recovered and close to 2400 deaths reported, compared to world’s numbers of 43lakhs infected, 15.5 lakhs recovered and aprox 2.9lakh deaths reported. We believe India thus far have been successful in containing corona virus.

There are various ways this data can be interpreted. On the positive side, death rate had been under 3% of the infected people, which is usually the case of many other seasonal infections. Over one third of the people have recovered despite the fact that there is no specific treatment for this disease as of now. It gives us confidence to say that Corona is not that dangerous as it had been played out to be or severity of its impact on infected person’s health is diminishing. If one exercise good precautions and maintain good hygiene, eat right and live a healthy life style, one need not worry much.

But remember large population of India is sitting indoors. Government had given some concession in select areas during lockdown 3.0 which is expected to be further relaxed post 17th May. In most likelihood it will be left to the state governments to decide what activities to be permitted in what area. It is to be seen what percent of workforce will be allowed to move a little freely and how they will commute and its impact on corona numbers.

Even with so many migrant workers moving in large groups to go their home, corona’s spread is still under control. We feel that biggest challenge will emerge when public transport system will be opened and all workers will be allowed to go to their workplace. At such time it will be near impossible to maintain physical distance and exercise other precautions. This is something which is very difficult to guess unless you do that.

We believe that even if with opening of public commute, the corona cases increase dramatically, it will not be fatal. We would have learnt by then living with corona and how to handle it in our body. It will definitely raise a scare but knowing the immunity of our countrymen and probably emergence of good news from severely affected countries will give us strength to face and win over it.

Impact on Equity Markets

PM’s announcement which has to be followed by finance minister’s announcement of complete package will definitely bring cheers to the market and markets may rise over next few days. But these packages will not turn the fate of the economy overnight. First fine prints have to be studied and the benefitting industries will also take time to take advantage of policies and convert it into increasing topline and bottom-line.

Also fear of sudden spread of corona on opening of public transport and other relaxation to be given to the country, along with global political & economic events, will play spoil sport for the markets. We feel that markets may initially spike a bit but then again will correct. The secular uptrend may be visible only around festival season later in the second half of the year.

What Should You Do

Government may offer tax free bonds for long term. We believe it would be a good option if offered but before recommending, we would have to see the terms of the issue whenever it comes. And for equity, make good use of the opportunity to book losses, if any around this time that you can use to offset against profits over next eight years and save on the capital gains tax. Also spread your equity investments over next 6-9 months. Some investment in gold for about a year is not a bad option either.

Such period offers good consolidation opportunity, if you have large cluttered investment portfolio then review and resize it. So contact your investment Mitra and discuss your portfolio to check how you can benefit from the situation or you may contact us, reply to this post or leave your message on 9958447700.

Happy Investing!

Team InvestmentMitra

Comments

  1. Sandeep Khanna12 May 2020 at 22:01

    You tend to give right direction from time to time. Keep it up!

    ReplyDelete
  2. Ajay Sharma13 May 2020 at 01:42

    Thanks a lot sir for your appreciation

    ReplyDelete
  3. Unknown13 May 2020 at 04:45

    Thanks. Keep on giving such useful information and advice.

    ReplyDelete
  4. Ajay Sharma13 May 2020 at 09:49

    Thanks a lot sir for your appreciation

    ReplyDelete

Post a Comment

Popular posts from this blog

This Republic Day Write Your Own Financial Constitution

By
“Constitution is not mere a lawyer’s document, it is a vehicle of life and its spirit is always the spirit of Age” – BR Ambedkar A constitution primarily is a document that details the rights, obligations, privileges, duties and responsibilities of the people living within the corridors of, and leading that country. It details the rule of governance. Without a constitution it will be difficult to live like a civilised society. We would be living like in stone-age where “Might was Right” and jungle raj prevailed all over. Like a country, each individual should also have his or his family’s own financial constitution detailing various financial objectives and the process to achieve those financial objectives, rules that will govern the way its finances will be managed etc. This applies to all individuals without exception and is more popularly known as “Financial Plan”. Like a constitution your financial plan should have a Preamble and different schedules. Preamble -
Post a Comment
Read more

Time or Timing – What is more important with Sensex @ 64K

By
  The Stock Market is the device to transfer wealth from the IMPATIENT to the PATIENT. After swinging in a range for almost one and half years, markets breached their previous peaks and are scaling new one now. Markets have risen by almost over 14% in last three months. Major reason for this sudden rise is the return of FIIs to the Indian stock markets following the fact that India is the fastest growing economy and growing over 6% despite covid, global economic slowdown and geo-political tensions. We invest for long term and everyone knows in the long run markets will go up irrespective of intermittent shocks like scams, dot-com bubble, Lehman crisis, covid or banking troubles in USA etc. Following picture depict the journey of Sensex over 40 years since its inception.   Source; www.thenwsmen.co.in The unfortunate part is we are more concerned about the short term movements of the markets. Every time there is sudden rise or fall in them market we are gripped more by fear and l
Post a Comment
Read more

On Cross Roads

By
“We cannot truly plan, because we do not understand the future- but this is not necessarily a bad news. We could plan while bearing in mind such limitations. It just take guts.”- Taleb:   Propounder of The Black Swan theory. Pessimism that set in March, still persists in our minds. In fact it has deepened with growing number of Covid cases being reported. The largest question ruling our minds today is - Shall we ever be able to overcome it…………..     and if yes by when and how? Have we ever wondered how have the Indian culture survived for so many thousands of years, how come so many Indians who were transported as labourers to many African and European countries centuries ago are now ruling the roost or how come most of the top 20 firms in the world have Indian heading them and so on……….. The only reason to above and many such questions is our “ Ability to Adapt ”. We are fast learner and very quickly adapt to new situation. Indians enjoys six different weather in a yea
3 comments
Read more

Markets Tumbling, Recovering – What to do??

By
Markets Tumbling, Recovering – What to do?? "The best time to plant a tree was 20 years ago. The second best time is now." - Chinese proverb. In times like present most people flock towards safety. Most do it because they don’t know how long this doomsday atmosphere will last, some even feeling like there will be No Tomorrow. But hunger for good returns on our investment never ceases. Kin Hubbard satires, "The safest way to double your money is to fold it over and put it in your pocket." On investment and earning good money from them, Warren Buffet – the legendary investor says, "If I buy a farm, I don't know whether there's going to be drought next year, but I know that there are not going to be 20 straight years of drought, and I know there's not going to be 20 straight years of great rainfall." It is a proven fact that no matter what, in long term best returns come from stock markets only. And as Seth Klarman says, “The stock mar
1 comment
Read more

Have You Missed Boarding the Bus

By
  "The market does not trade upon what everybody knows, but upon what those with the best information can foresee" – William Hamilton Russia-Ukraine conflict had clouded the stock markets worldwide giving speculations to the talks like possibilities of third world war, Russia heading for deep financial crisis, energy crisis looming large over Europe etc. With Russia-Ukraine conflict seems getting settled and much to the pleasure of Russia – the Super Power, this has now become a non-player for the markets until some significant deviation happens from the present stance taken by all major countries of the world. Present is the world of instant. We want everything instant and so are our reactions. In the age of internetted social life, dissemination of information is highly fluid. And over 99% of these netizens have mastered the art of forwarding such information without verifying if it’s a news, noise or manipulated agenda of some interested parties.   Most economies in
1 comment
Read more