4 fund managers respond to the question that's on top of every investor's mind right now
Here's what these four fund managers had to say about when we might expect the market to recover.
Fund Manager, Motilal Oswal Mutual Fund
Market crashes are swift and sharp and threats garner more mindshare than opportunities. The same is true this time with a global meltdown triggered by the coronavirus spread and lockdowns. Directionally, major economic impact may last from three months to a year for most companies. The relevant question to ask is whether it affects the terminal value of business enterprises. Growth may take a hit for a year but does it alter the longer-term earnings trajectory of the broader markets? Does the market correction factor such temporary near-term disruption? Are valuations attractive? The recovery begins not when we see light at the end of the tunnel, but when it's a shade less dark than it was before. And in my view, our markets are quite close to it.
MD & CIO - Emerging Market Equity - India, Franklin Templeton
Disruption to global trade could prevent a V-shaped recovery. However, adequate support in the form of monetary and fiscal stimulus could augment gradual recovery. Intensification of social-distancing measures is likely to lead to supply-side as well as demand-side shock to the economy. Effects of delayed domestic-demand recovery and weaker exports will be seen on the corporate-profitability trends, labour market and asset-market volatility for some time to come. However, given the robust macroeconomic backdrop and attractive valuations, long-term investments at current levels could offer a favourable risk-adjusted reward.
Anil Shah, Senior Fund Manager, Aditya Birla Sun Life Mutual Fund
The coronavirus is likely to impact the global as well as Indian economy mainly in 1HCY20 and we should see a gradual recovery in 2HCY20. While some sectors such as auto, IT, metals, airlines, hospitality and NBFCs will be negatively impacted, sectors such consumer staples, low-ticket consumer discretionary and retail should continue to do well. The pharma sector continues to see strong demand both domestically as well as for exports. Increase in data usage is beneficial for the telecom sector. Private banks have seen a sharp correction but those with a strong liability franchise and high-quality assets may gain market share. Also, insurance companies should continue to see secular growth.
Harsha Upadhyaya, CIO - Equity, Kotak Mutual Fund
Indian equities have suffered one of the worst declines when compared to other global equity markets and have reached a very attractive valuation level for long-term investors. While it is difficult to predict the extent of or the timing of recovery with any accuracy, the near-term volatility in markets may persist, given the challenges posed to the economy. However, these are typically the crisis periods wherein long-term investors, especially those who are able to withstand short-term vagaries of equity investing, will create lot of wealth once the situation normalises. The normalisation process of the economy could take a few weeks to a few months, depending on when the spread is contained.