Aurum Capital Current View on Market: 06 Mar 2020
We were seeing a turnaround in the economy, and now two back to back events seem to be
jeopardizing this in the short term viz. Coronavirus and Yes Bank issue.
Novel Coronavirus or COVID-19 or Coronavirus:
Coronavirus started in China and has now spread across the globe. Our initial analysis says that this is
a highly contagious virus, but has a lower mortality rate as compared to Ebola, SARS, and H1N1. The
deaths have been mainly confined to 60+ age group, where immunity is low. It is also probable that
the virus effect will be much lesser in warmer and tropical climates. India has also reported cases of
the virus. The first 3 confirmed cases have recovered, and till date there is no death reported due to
the virus in India.
It may be a bit early to assess the damage. Let’s wait and watch. It may cause a significant disruption
in short term and significantly affecting supply chains, travel, hoteling, movie exhibitions, and large
gatherings to name a few. We think that this too shall pass. We should shy away from making short
term decisions and look at the longer term picture.
There has been a withdrawal limit on Yes Bank depositors for a period of one month. Yes Bank had
problems in its balance sheet and it was fairly known. It’s the fourth largest private bank in India with
deposits in excess of 2 lakh crore. We feel it’s too important a bank to fail. Our belief is that depositors
will be rescued. It really depends on how the government and RBI tackles this issue. It does create
short term uncertainty, but is a part of a larger cleansing process of the economy. If this is not handled
swiftly, it may lead to deterioration of confidence in the banking and financial system. The government
and regulator will definitely try to avoid it.
Our long term view on the economy and the growth prospects does not change. We should continue
to be invested if our horizon is long term and look at opportunities to add to our investments.
We had seen that in the Dec-end to Jan period, broader markets had done very well. Post that, the
Coronavirus issue and now the Yes Bank issue has hit the investors. Our firm belief is that once this
tides over, we should be back on our path to better times.
We have chosen our stocks with lot of thought and research. We remain confident of our portfolio in
the long term. We continue to track and research all our investments rigorously.
We had given a limited-time offer of a 20% discount mainly for the benefit of renewals of our client
subscriptions. We thank you for the over-whelming response on renewals. The members who have
not renewed may avail of this. We will be closing the 2-year plan and 20% discount soon.
We wish you best on the upcoming festival of Holi.
SEBI registration No: INA000011024