CEO Speak

With the world reeling under the COVID 19 scare, India is also not shielded from its impact. While we all hope for the country’s preparedness to battle out the epidemic, it may not be misplaced to say that the whole world is currently collectively praying for the weaning off of this virus. The health impact is palpable with the cases getting detected and the media stories around the globe. The economic impact is also going to be significant, especially in sectors and trades which are dependent on their supply chain to China in specific. We can already see how the world is pooling in resources to combat this global crisis and our thoughts are out for everyone affected, as we are waiting for the world to resume normalcy.

The markets are also affected by this crisis and retail investors are looking up to the industry for direction. So, here are some of our thoughts –Facts and Perspective.

We look at events is perspective but with data points, dispassionately.

We have seen several macro scares in the past and we have historical data points, as given in the chart below, giving us a perspective on how markets have reacted to certain events and how they have bounced back. If you see the events below and how the markets behaved in short term, it will be also interesting to see how the markets bounced back and gave very healthy returns in a 3 year horizon post the crisis.

The closest semblance to the current crisis is the SARS epidemic which occurred circa 2003 November and it was not until July 2004 when WHO could declare the world SARS free. The point that we want to drive and also strongly believe is that this crisis may have occurred and is spreading and it will take some time to get under control. However, there will be a degree of variation to which players in the market will be affected by this crisis, both locally and globally. Once the dust settles down, it will be a matter of time when the markets will also show an upward trend.

So for an investor, who has invested for a certain financial goal, he must not panic and tide through this testing time, if his initial investment goal was long term in the market.

Source: Bloomberg

We strongly believe that SIP (Systematic Investment Plan) remains to be one of the wisest way to invest in the equity markets to average out the cost of investing over multiple market cycles. Hence investing at these lower levels should also turn out to be beneficial for investors who are here with the long term financial goal.

At L&T Mutual fund, we follow our proprietary investment model which is based on a robust monitoring and risk management process, which ensures checks and balances at every stage of investment management. We continue to remain focussed on our investment philosophy, investing into companies with strong fundamentals across our funds. We believe that the current situation is a temporary setback and with the continuous reform interventions by the government and central regulatory bodies, it is a matter of time that the trend in the economy and the markets change.

Till such time stay invested, if you have invested in the markets with a long term horizon, as per your financial goal.

Disclaimer – The article (including market views expressed herein) is for general information only and does not have regard to specific investment objectives, financial situation and the particular needs of any specific person who may receive this information. The data/information used/disclosed in the article is only for information purposes and not guaranteeing / indicating any returns. The article provides general information and comparisons made (if any) are only for illustration purposes. Investments in mutual funds and secondary markets inherently involve risks and recipient should consult their legal, tax and financial advisors before investing. Recipient of this document should understand that statements made herein regarding future prospects may not be realized. Recipient should also understand that any reference to the indices/ sectors/ securities/ schemes etc. in the article is only for illustration purpose and are NOT stock recommendation(s) from the author or L&T Investment Management Limited, the asset management company of L&T Mutual Fund (“the Fund”) or any of its associates. Any performance information shown refers to the past and should not be seen as an indication of future returns. The value of investments and any income from them can go down as well as up. The distribution of the article in certain jurisdictions may be restricted or totally prohibited and accordingly, persons who come into possession of the article are required to inform themselves about, and to observe, any such restrictions.

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