The Sensex has been seriously under performing over the last 10 years. The Indian equity markets are at an all-time low. If we evaluate the stock market in-terms of historical valuation, dollar returns and inflation adjusted-returns, the Indian markets are way below what they were even in 2008.
Now 2020 is here. And this might be the best time to invest in Equity!!
Why do I say that midst this pandemic? This year we have seen the highest and fastest fall in the history of the Sensex. This makes the stocks sufficiently cheap with respect to their historic earnings and even their asset value. Even the commodity prices are at multi-decade low. On top of all that there will be dramatic movement of money coming into the Indian stock market as technologies have cut down borders and cut-back business losses (even with lockdown).
So why the fear? What is the rationale behind people being afraid? I believe that for the Stock Market there is nothing to fear other than fear itself.
The pandemic is a once-in-generations kind of event. When we are in the middle of a difficult situation in life – we think of it as a “huge issue”. But when we look back, without the emotions and fears of that time – it seems like a blip in the journey of life. Perhaps, that’s where we are today – in the middle of a difficult situation. But this is also the time when we look at the situation rationally and without emotional influence.
The Sensex may have few more bouts of sell-offs left. And while there is no point in trying to time the exact bottom – the markets are almost bottomed out. This is the time to invest and invest cheap. Remember the end-of-world is already priced in!