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Car sales has picked up in China as commuters dont feel safe in Public Transport.
Meanwhile in US - people are using bikes instead of Public Transport.
Im also not sure where to share this studyā¦ So Iām sharing hereā¦ if it is not appropriate here, please feel free to move/flagā¦
My original idea was to identify what kind of cos fell/fall during market correction and we can find any correlationsā¦ @deevee already shared his wonderful thoughts on capital returnsā¦ The following summarises the market fall % with fundamentals indicatorsā¦ Normal typical ideas were re enforcedā¦ Like large caps fell less than mid/small caps ( row 1, last panel Market capitalisation) and low peā¦ high PE stocks were also hammered less and low PE stocks becomes even more cheaperā¦ so does other well know factorsā¦
Surprises ( at least for me)
- high dividend yield stocks are hammered
- higher value stocks ( in rupee level, row 1 panel 1) are less hammeredā¦ This also probably related to retails affinity towards penny stocksā¦ Similar observations by @suru27 @phreakv6 with < 2 L shareholding
- higher investments need not act as a protection for fall ( row 3, panel 1 maybe PSU Banksā¦ I may need to redo without finance, apologiesā¦ But cos like Vindhya Telelink is what I mean).
I also try to look which sectors were spared from hammeringā¦ inspired by @vivek_mashrani technofunda
Top sectors
| Industry | Average Fall % | Number of cos |
|---|---|---|
| Couriers | 18 | 4 |
| Pharmaceuticals - Multinational | 18 | 7 |
| Diamond Cutting / Jewellery | 20 | 12 |
| Food - Processing - MNC | 21 | 4 |
| Personal Care - Multinational | 21 | 4 |
| Air-conditioners | 22 | 2 |
| Pharmaceuticals - Indian - Bulk Drugs & Formln | 25 | 46 |
| Pharmaceuticals - Indian - Formulations | 25 | 31 |
| Pesticides / Agrochemicals - Multinational | 26 | 1 |
| Healthcare | 28 | 19 |
| Photographic And Allied Products | 28 | 2 |
| Recreation / Amusement Parks | 28 | 3 |
| Paints / Varnishes | 29 | 6 |
| Dry Cells | 30 | 4 |
| Textile Machinery | 30 | 6 |
| Textiles - Composite | 30 | 7 |
| Finance & Investments | 31 | 163 |
| Refractories / Intermediates | 31 | 3 |
| Textiles - Spinning - Synthetic / Blended | 31 | 10 |
There were the top of the packā¦ No surprises with Pharma being dominantā¦ Courier services were a big surpriseā¦ Also amusement park was anotherā¦ ( market always surprises us). There are some textileā¦ This sector last charm last years ( after GST). They could make a big come backā¦
Bottom sectors
| Industry | Average Fall % | Number of cos |
|---|---|---|
| Transport - Airlines | 45 | 6 |
| Tyres | 45 | 8 |
| Engineering - Turnkey Services | 46 | 22 |
| Aluminium and Aluminium Products | 47 | 9 |
| Automobiles - Scooters And 3 - Wheelers | 47 | 3 |
| Banks - Public Sector | 47 | 12 |
| Chlor Alkali / Soda Ash | 47 | 6 |
| Electronics - Components | 47 | 10 |
| Electronics - Consumer | 47 | 6 |
| Fertilizers | 47 | 19 |
| Mining / Minerals / Metals | 47 | 29 |
| Auto Ancillaries | 48 | 77 |
| Automobiles - Passenger Cars | 49 | 3 |
| Computers - Software - Converts | 49 | 2 |
| Diversified - Mega | 49 | 3 |
| Banks - Private Sector | 50 | 21 |
| Diversified - Medium / Small | 50 | 5 |
| Fasteners | 50 | 3 |
| Steel - Large | 50 | 9 |
| Diversified - Large | 51 | 2 |
| Moulded Luggage | 51 | 2 |
| Oil Drilling / Allied Services | 51 | 9 |
| Sugar | 51 | 23 |
| Aquaculture | 52 | 4 |
| Electrodes - Graphites | 54 | 3 |
| Pumps | 54 | 5 |
| Cables - Telephone | 56 | 5 |
| Automobiles - LCVs / HCVs | 59 | 5 |
There were no surprises at the bottom, auto, PSU banks, Tyresā¦ But Im surprised to see Fertilizersā¦ We had very good monsoon last year and I believe our dams have enough water ( didnāt check recently )ā¦ Its also predicted to have a good monsoon this year. With migrant labour force back to their hometown, we may see workforce switching to agriculture due to lack of opportunity and water availability. So fertilisers could have some tail winds. My guessā¦
Discl: This analysis done by comparing market top in Jan 2020 and bottom in March 2020. Price is from bhavcopies of BSE/NSE and fundamentals data is from screener ( @ayushmit @pratyushmittal )
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Some rough calculations:
Every dollar per barrel reduction in crude price reduces crude import bill by about Rs10,000 crore.
Indian basket crude was around $65 in january,now its under $20.
So if this year crude stays under 30-35,and since Govt is not passing on the benefit of reduction of prices,it saves over Rs3 lakh crore.
Considering already announced Rs 1.7 lakh crore fiscal stimulus,there would still be enough money to announce more fiscal stimulus in a staggered manner as more clarity emerges about the health and economic crisis,which seems like what the govt is planning to do.
Therefore,the infrastructure push through the National Infrastructure Pipeline announced a few months ago is not necessarily off the table,it may just be delayed by a quarter or two.We might see a pick up in infra spending after monsoon season.
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Are you taking into account the demand slump which has happened due to the lockdown and also the sluggish economic growth projected for the year. this arguement of the govt saving money will work only if the engine of domestic consumption is assumed to be churning at normal rate. I really doubt that this year ā¦
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A case of second order effects of the world shutting/slowing down due to covid-19, causing lower consumption of energy, causing crude to fall, causing companies to lose their shirts, causing Banks NPAā¦ (causing panic in sector, causing leading indices to fallā¦ so on and so forth)
News of Nymex Crude crashing 37% flows in, followed by this news snippet of ICICI Bankā¦
There are long term threats to Alcohol and Tobacco sectors due to health related weakness they generate. I donāt know how folks could become positive on ITC and other tobacco stocks. Too much of stock technical BS is floating around.
There will be very very few smokers who will quit smoking for these reasons, people will smoke but may be follow social distancing. In grand scheme of things it will not matter much.
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Industry wise scenario during lockdown by CARE
Data driven analysis for estimation of end dates for all countries. Worth to study and track it as it is updated every day.
[https://ddi.sutd.edu.sg/](https://ddi.sutd.edu.sg/)
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I donāt know if this is the right thread to post it, but few people may find it informative:
Disclosure: I donāt hold any of the mentioned stocks in the above articleā¦
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This coronavirus pandemic was already preceded by the two years of stress in Indian markets due to issues ranging from slow corporate earnings to the liquidity crisis after the IL&FS and DHFL fiascos. So unlike the financial crisis of 2008-09, these are unique testing times where a global healthcare crisis has accompanied an economic crisis.
And like many other crisis situations in the past, these times will also provide the opportunity in the markets. But usually what happens is that retail investors generally make the mistake of buying low priced stocks or end up investing in cheap cyclical stocks which is the worst mistake they make, making things worse resulting in serious wealth destruction. Instead of that, the trick lies in buying on to companies that will stand the test of time and hold on to them for even longer period of time say five years or seven years because one never knows when there will be the possible precise solution for Covid-19, thereby not knowing that till what time the repercussion of the crisis will last. Thus in such situations safety of capital should be the prime objective of the investors. So one should adhere to the companies which could be value buys & which provides a much better comfort by way of good track record & optimum level of some fundamental metrics which can be categorized as :
- Safety Parameters (such as very minimal debt levels, adequate current ratio, no or near-zero amount of pledged shares, etc)
- Growth Parameters( such as track record of sustained revenue growth, adequate profit growth, better dividend yield, very minimal equity dilution, etc.)
- Performance parameters ( such as higher RoE over time, sustained net profit margin, free cash flow generation, etc.).
Its not always easy to deep dive into all qualitative aspects of each stock upfront. So its better to opt for reductionist methodology so that one is able to zero in on to very few fundamentally sound players which are most likely to survive the test of times and with much stellar margin of safety for assured long term health creation.
Scientists are now also exploring what is called far UVC ā an even shorter, higher energy wavelength ā that appears to be even safer and which could be bathed throughout a room continuously, disinfecting surfaces in addition to destroying pathogens in the air. Manufacturers are just beginning to ramp up production of far UVC fixtures.
Far UVC may become āmust haveā product if it answers to all the challenges ahead of it. Something to keep back of our mind.
Killing the virus with light: Special ultraviolet light fixtures installed on walls or ceilings could play a role in reducing the spread of the virus. The technology, known as āupper-room ultraviolet germicidal irradiation,ā is already used to disinfect the air in hospitals, but stores and restaurants could do the same to reassure jittery customers.
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An excellent article on why market have behave since crash
Wanted to share in market meltdown thread but it was locked.
Below para Sums up my approach/feeling
The problem with this perspective and behaviour is that it is classic āfirst-level thinkingā, instead of the more desirable second-level thinking necessary in markets (hat tip Howard Marks). What investors fail to understand is that it is precisely the synchronised move to higher cash allocations and a more defensive positioning mirroring their cautious outlook - which they themselves were very much a part of - that caused the market to crash in the first place . If everyone increases cash allocations from 5% to 20% at the same time, markets will crash, regardless of the cause. And that has absolutely been the case, from retail to institutional investors, to insurance companies and other institutions alike (QBE Insurance, for instance, recently came out and said they had āmaterially de-risked the investment book including exiting all equities, emerging market and high yield debtā; HK Exchanges similarly exited 100% of its equity exposure in March and early April).
The thoughtful market observer would ask the question, so what happens next? Most of these investors donāt plan to continue to hold 20% cash indefinitely. They are looking to re-deploy it back into equities at a time they perceive to be more opportune. What they really mean when they say that is āwhen the outlook is less uncertain and they feel more comfortableā, but what they overlook is that sellers will also feel more comfortable at this point; however, the important practical point is that it means they will be future net buyers of equities. Furthermore, they have already sold as much stock as they want/need to sell in order to feel comfortable with their remaining exposure in the face of what they expect will be considerable economic fallout in the medium term. Given their already very cautious outlook, it is therefore unlikely they will sell a whole lot more in the future.
What has happened at this point is that a previously unknown unknown has now become a known unknown , and consequently is now already factored into investor risk appetite and market positioning, and so it ceases to have much impact on market prices. And this is true regardless of whether the underlying economy is weak or not, because the economy does not drive stocks prices - demand and supply do. At this point, and in contrast to the intuitions most recently-scared investors harbour, a further market crash actually becomes extremely unlikely , and those sitting in cash hoping for more of the same are very likely to have their hopes dashed.
This is why markets almost always bottom well before the real economy, and recover in a manner that confounds most investors. Right when the majority of investors have just finished selling down, raising cash, and positioning themselves cautiously and in preparation for the ācoming downturnā and the ābuying opportunitiesā sure to emerge therefrom, markets start to rally and the opportunities they had hoped and expected to encounter swiftly disappear. The buying opportunities are not created by the economic downturn per se, but investors preparing for the economic downturn by raising cash.
MY Opinion:They say if u wanna panic panic early, panic to raise cash was at 11500 levels nifty not now , in my opinion and I might be wrong its time to panic in reverse direction.
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Nice article to be read. Because of such early warning, stock market is best precursor of economy. In my opinion, earthquake has already happened, and there is (are) possibility of aftershock(s). What will be the size of aftershock nobody knows, and the largest aftershock may come after Q1 earning.
Nicely written. Super articulation!
However, I think Coronavirus is not a one shot event like a natural disaster. The event is and expected to be prolonged with its effects stretching further. Its chronic more than acute. Now March 23 can be a peak of fear, may be the markets bottom but no reason why indices would fly upwards. IMHOā¦ It would test, retest the near previous lows time and again for a considerable long time.
2018 till 2020 we saw sensex range between 35k to 40k. Now it seems will be in a range between 27k to 32k.
However, individual stocks having growth story will continue to rise irrespective of broader indices.
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By this logic there should be no Elliot Wave C. See markets rose between Mar-May08(chart below) - Using the above logic by this time " previously unknown unknown has now become a known unknown" Why then, market again fell and broke previous lows??
There are many scenarios possible - A new wave of people can go in cash, thinking market is not discounting āknown unknownā well. Some consistent bankruptcies either Domestic or International can scare people, new NPAs may emerge - Not saying all this would happen but just trying to highlight its not that easy as written above.
