The market went into pandemic crisis mode due to the spread of the novel coronavirus, COVID-19 followed by the decline in international crude oil prices. With lockdown measures coming into force towards the end of March, the market saw a sharp decline in terms of expected returns; particularly the equity markets. Though some easing measures are taking place with certain sectors opening their operations, uncertainty still looms around when or how the market might bounce back. Most experts believe that one shouldn’t expect a sudden recovery and certain level of volatility will exist for some more time at least. So an investor needs to keep in mind the below points to ensure that their portfolio can sustain the present situation to achieve short term or long term goals. 

1. Unpredictability in the short term:

While lockdown measures are being relaxed, there is still a lot of uncertainty regarding a return to production and supply in full capacity. As travel restrictions persist and the spread of the virus is increasing, it is not feasible to predict the short term movement of the market. With respect to this, we could see many small and medium sized companies succumbing to the pressure. Since we can’t predict how the virus may continue to spread, there is still ambiguity around when the corporate world, the manufacturing industries, and the services industry will go back to their normal functioning capacity, as they were pre-lockdown.

2. Quality matters in the long term scenario:

There is some clarity when it comes to long term in the current scenario. In the past, we have seen several companies – like Tata Steel, Britannia, TVS Motors, Birla Corp, Raymonds, Bata, etc sail through difficult situations and continue their legacy. Companies that have maintained a good standard of quality with strong financials and those that seek to reach the same, will strive to continue their businesses and services. Therefore, when it comes to thinking about the long term, don’t try to gauge at what point the market will recover but instead look towards those companies that can withstand the test of time regardless of how the market is doing.

3. What should investors do:

The most important thing an investor needs to do is to stay calm and make informed decisions. Don’t resort to panic buying or selling as an attempt to mitigate damages, since this may lead to significant losses when the market starts to do better. When an investor decides to start investing, and has a coherent idea of where to put his/her money, the best method would be to make contributions through a systematic investment plan (SIP). This will help to maintain disciplined savings and at the same time allow someone to benefit from rupee-cost-averaging. Furthermore, if SIPs are active, it is recommended to continue instead of deploying a lumpsum amount in 4 to 6 tranches, considering the  current market volatility.

Making thoroughly informed decisions may be hard during these confusing times; especially for new investors with lesser experience. In this case, the best thing for you to do is to work with a certified financial advisor. Working with an experienced professional can help you formulate the best portfolio to achieve your goals. So find the right advisor for you and start now – don’t wait for a sharp rise in the market, it may not happen!