In India, long before anyone knew the word corona virus, Quarterly GDP was falling. Markets started the month of February 2020 on a negative note after the Union Budget 2020-21 announcements failed to meet investor expectations. Markets continued the downtrend for the second consecutive month in March 2020.GDP was going down but markets were making new peaks. I wrote a blog almost a year back (3rd june 2019 to be precise) predicting correction in stock market. You can read it by clicking here. Whenever stock markets start trading in high valuation zone, market start finding reasons for correction. Coronavirus is one such scape goat.
Corona virus threat coupled with falling oil price created panic in world market. Finally, markets are corrected 20-25% and reached in bear phase. WHO declared COVID-19 as Pandemic.
No one knows for how long this bear phase will continue. However, market is offering huge discount and it is the right time to start shopping in stock market for quality stocks. Presently, (12.03.2020) Nifty 50 is trading at PE ratio 21.83. It is good time to enter the stock market and buy quality stocks with 3 to 5 years investment perspective. Defensive investers must start their SIP’s in mutual funds.
Does Corona Virus will have all negative impact on Economy?
Countries across the world, including India and the US, are imposing travel restrictions, fuelling fears of a global recession. There are expectations that the loss in trade, tourism, and fresh investment can drag GDP growth.
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Aviation, tourism and those manufacturing companies heavily dependent on Chinese spare parts will face worst impact due to COVID-19 Pandemic.
However, there will be some companies who will make huge profits. Companies making surgical instruments, masks, sanitizers, pathology labs, Hospitals, Pharma companies, local spare parts manufacturing companies and news channels will see top line growth.
More people die because of Flu and extream climate conditions then the no. of death occured due to noval corona virus also known as COVID-19. However, for COVID-19 there is no drug or treatment available till date which is the prime reason for panic across the globe. If it will take more than a month from now in finding cure, it will have a huge impact on world economy. In a global village, no country can survive in isolation.