The document provides an analysis of the current COVID-19 impacted market situation and provides recommendations on where to invest. It notes that while the market has rebounded from its lows, there is still uncertainty around how the pandemic and economic situation will evolve. It evaluates factors like earnings pressure, macroeconomic conditions, liquidity and sentiment. Both positives like stimulus measures and negatives like uncertainty are discussed. Recommendations include reviewing one's portfolio, having contingency funds and insurance, and investing through mutual funds for diversification and professional management during this volatile period.

1. Where should you invest ?
in
COVID -19 -MARKETS
MELTDOWN

2. Where is the Market Headed?
Economy is still in Lockdown and stock market has already started recovering?
Revival has started after a dramatic fall….
NIFTY, from a high of 12430
Fell by 40% to 7510 in March
And has now rebounded to 9154 on April 24th
a 22% growth from the lows.
Where is the market Headed?
Has the market hit its bottom?
Will it first see 7500 again or will it touch 10000 ?

3. The Rebound
The Markets have seen a revival after a dramatic fall
Change (%)Preceding One month
1- month
Nifty Sensex Mid Cap Small Cap
20.7
20.8
16.5
17.7
-37.0
-36.9
-39.3
-45.3

4. We are all flooded with information, some factual , some predictions, some opinion and some
extrapolation from analogies to similar epidemics or crisis in the past.
Today most people are just guessing using extrapolations and mathematical progressions and
giving it fancy names such as analysis, assessment, projections, forecast, etc.
The harsh reality today is that there's no commonality between what happened in
1987, 1992, 2001, 2008 or 2013 when markets corrected significantly.
Each was a different story. Each crisis is different.
Howard Marks recently said in a memo to his clients,
“Everyone has the same data
regarding the present and
the same ignorance regarding the future.”
Lets examine where we stand today?

5. ØWe are in the midst of one of the greatest pandemics to hit the world since the
Spanish flu of 1918 with more than 3 million cases and 200000 Deaths,
but more than 750000 recovered patients too .
ØThe world is not coming to an end.
ØThe new normal may be quite different from what we are used to. Just to illustrate, TCS in its
guidance given along with 2019-20 results has targeted that, only 25% of its employees will work from
office by 2025.
ØThe world may be facing one of the greatest economic depression since the great depression of
1929, with GDP’s contracting and the possibility of only India and China having a mildly
positive growth rate in the current year.
ØThe greatest oil price decline in the OPEC era with WTI hitting negative.
However what we know for sure is:

6. Ø Central banks and Govt intervention is providing the greatest stimulus to world GDP of all
times.
Ø Even the World Bank is willing to commit its complete war chest of $1trillion to fight the
pandemic which is more than 1 % of World GDP and more than 2% of the Developing world
GDP.
Ø The US and Europe, have committed more than 10% of their GDP in fiscal stimulus to meet
the economic problems head-on.
Ø The story of Human evolution is not just a story of survival, but one of adaptability and
triumph.
Ø One of the biggest moral dilemmas faced by the world today is the
Trade off between Minimizing deaths versus Restarting the economy.
However what we know for sure is:

7. 1. Earnings and Valuations:
Earnings are under pressure for at least next 2 Quarters but markets are below mean valuations.
2. Macros :
Oil, Interest rates, Inflation all benign. Inward Remittances may be hit.
3. Liquidity :
Excess Liquidity internationally with interest rates at zero or near zero levels : RBI ensuring
adequate Liquidity in India.
4. Sentiment :
Both Investor sentiment and consumer sentiment is negative. Change in sentiment dependent on
End of Covid 19, restart of businesses and financial stimulus by the Government.
“Investing is the art of positioning capital to profit from future developments”
Essentially markets have the following four legs:
Where is the Equity Market headed?
“To make money in stocks, you must have the vision to see them,
the courage to buy them and
the conviction and patience to hold them.”
Thomas Phelps

8. Ø Low Covid Infection as compared to other countries.
Ø Low Crude and Metal prices.
Ø High Liquidity and Low interest rates worldwide.
Ø RBI Providing monetary stimulus and reducing Interest rates.
Ø Bumper Rabi crop and Agricultural growth.
Ø Expectation of a normal monsoon 2020.
Ø India has low Debt to GDP ratio as compared to other countries.
Ø India is a Consumption driven Economy with essentials contributing to major
part and discretionary spend is much lower.
Tailwinds- Positives for the market

9. Ø 55% of the Economy is still working and 90 % of IT & ITES sector working efficiently from
Home.
Ø Strong Anti China sentiment building worldwide.
Ø Potential Y2K moment for Pharma, Electronics, Auto & Auto Ancillaries.
Ø Below Mean market valuations.
Ø High Liquidity will drive asset prices in stable markets.
Ø India’s wt. in MSCI index is up – shall lead to more ETF Inflows.
Ø Assets are not damaged but intact. Supply Chains will normalize –
output will start.
Tailwinds- Positives for the market

10. Ø High level of uncertainty – When will this end?
Ø What will be the new Normal?
Ø The actual Economic problem will start once Covid ends.
Ø Pressure on Government finances – Rise in fiscal deficit.
Ø Repayment capacity of MSME & HH will be adversely impacted.
Ø Change in spending habits Post Covid.
Ø WFH – The new norm will severely impact certain sectors.
Ø Reduction in Remittances from abroad .
Ø P&L Problem may lead to Balance Sheet Stress across sectors.
Ø Economy to face a Triple Shock
a) Demand Shock b) Supply side shock c) Financial shock
Ø Indian economy already had low growth and a stressed financial
sector Pre Covid 19.
“Markets go up on Funds or Fundamentals”
Headwinds – Negatives for the market

11. “The best time to buy is when others are selling”
because
that is when great values are available and equities are cheap,
but
when the time comes to buy, you don’t want to,
because the factors that render others averse to buying
will affect you too.”
Warren Buffet

12. Ø Check your ASSET ALLOCATION .
Ø Review for absolute performance and performance against goals.
Ø Rebalance based on your risk appetite.
Ø Don’t be scared to book your losses in the underperformers.
Ø The Quality stocks / MF will recover faster as compared to duds.
Ø Diversify your portfolio across asset classes, country and currency.
"Buy stocks only when you find value,
not just because they have fallen in price or
may be trading at their 52-week lows.
Cheapness in price is not value."
What should You do ?
a) Review your portfolio.

13. b) What should be your Investment Strategy now?
1. Do you have a CONTINGENCY FUND to last you 6-9 months of expenses safely
parked in a liquid investment?
2. Do you have sufficient HEALTH INSURANCE also covering the unknown pandemics
for yourself and your family ?
3. Are you sufficiently covered with a TERM INSURANCE of 10-15 times your annual
expense plus debt if any, to take care of your family in case of any eventuality in these
morbid times.
4. Are the funds required to meet your FINANCIAL GOALS, occurring
in the next 2-3 years invested safely in low or zero risk debt instruments?
“The time to be defensive is not during a crisis but before a crisis.”
It is time to get back to the basics and ask yourself the following questions first:

14. Nifty returns when it will touch previous High..
“ Twin Risks investors face every day;
The risk of losing money
Or
the risk of losing an opportunity of a life time.”
Current Scenario 1 Scenario 2 Scenario 3 Scenario 4
Date 24th April 20 31st Mar 2021 31st Mar 2022 31st Mar 2023 31 st Mar 2024
NIFTY
Levels
9154.4 12430 12430 12430 12430
CAGR - 35.67% 16.47% 10.70% 7.92%

15. Ø Nothing can beat Equity returns in the long term – has given returns of more than 300
times in 40 years.
Ø Enter with a minimum 5 year horizon.
Ø Be ready to take risk and have a volatile journey.
Ø Don’t try to time the market.
Ø Nobody can predict market bottoms and tops – In short run, only 2 people know – God
and a Liar.
Ø Don’t fall into a Valuation Trap.
Ø Make a large number of good buys rather than aim for a just a few perfect ones.
Ø Preferably invest in equity through Mutual Funds and not directly in stocks.
Ø Don’t rush to invest - Invest in phases – don’t invest lumpsum in one go – Invest in
Arbitrage Funds and do a weekly STP over 3-6 months.
Ø Diversify across sectors and Large, Mid and small caps.
Points to be kept in mind before starting Equity Investment…

16. Investment in Direct stocks has the following concerns:
Ø Average portfolio performance, as some investments will not do well.
Ø Uncertainty and disruptions in many sectors may delay recovery.
Ø Historical valuations metrics have lost relevance in this time.
Ø Major credible information and data lag - Needs full time attention and focus.
Ø Behavioral bias can impact investment decisions.
Ø Best left to professional fund managers.
Direct Equity is like a Chakravyuha –
You may know the right time to enter
but
may not be able to exit profitably.
Should you do Direct Equity Investment – Buy Stocks or MF ?

17. Key Investment Learnings from Covid -19
Ø Risk has a new meaning. Understand the difference between Risk & Uncertainty –
“The unknown unknown.”
Ø Act before it is too late – The time to be defensive is before the crisis and not after it.
Ø Asset Allocation is the key – Take risk commensurate with the pain you can live with and
the years to your goal.
Ø Bear Market in one Asset class leads to a Bull market in another Asset class.
Ø “Markets go up on funds or fundamentals.”
Ø Diversification across asset classes, country and currency is most important.
Ø When it comes to investing – The best times is sometimes the worst time
- good news and good price never come together.
Ø Quality is paramount – Companies with Great Business models, deeper moats,
low leverage and management integrity always deliver.

18. Key Investment Learnings from Covid -19
Ø No crisis is similar – History doesn’t repeat but it rhymes.
Ø Pleasing investors all the time is not possible; it is always a trade off between current and
future joy.
Ø “Only two people know what will happen in the short term – One is God and second is a liar.”
Ø Self control and resolve are key to reach your goal ( Saiyyam and Sankalp)
Ø Fundamentals of Investing never change – follow your financial hierarchy.
When in crisis – go back to your basics.
Ø Return of Capital is more important than Return on Capital – “Jaan hai
toh Jahaan Hai.”
Ø Hope for the best- prepare for the worst – The next Black Swan event.
Ø Never waste a crisis.

19. 1. It is time to lower your Return Expectations as GDP, inflation and interest rates are
heading lower and market generates a CAGR in relation to the interest rates, bond
yields and risk premium thereon.
2. Invest a portion of your corpus in GOLD through a SIP in a Gold Bond/ETF/SGF or
a similar non-physical product as Gold is the best hedge against equity and more so
in uncertain times.
3. Keep CASH with you, Have liquidity not only for meeting any contingency, But, also
to reap the many opportunities this market is likely to provide in the near term.
“Your success in Investing will depend in part on your character and guts
and in part on your ability to realize,
at the height of ebullience and the depth of despair alike,
that this too shall pass.”
– Jack Bogle
Finally :

20. “Never waste a crisis.” - Rahm Emanuel, Barack Obama’s Chief of staff
“All great investments begin in discomfort and there is great discomfort today.”
Nothing is permanent in the World – not even the problems.
The Stock Market is like a TIME MACHINE – It is Offering Opportunities..
Ø Small Caps are available at 2011 levels
Ø Mid Caps are available at 2014 levels
And
Ø Large Caps are available at 2017 levels.
“A market downturn doesn’t bother us.
It is an opportunity to increase our ownership of great companies,
with great management at good prices. “ – Warren Buffet

21. THANK YOU!
&
“..HAPPY INVESTING..”
Stay Safe
and
Stay at Home !

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