Opportunity for long-term executives due to market volatility ?

The outbreak of coronavirus is engulfing the whole world. Till now it has spread to 175 countries. Due to the possibility of slowing down of the world economy, not only oil prices, but also the world stock market has seen ups and downs with a heavy downpour. NSE's Nifty index is down 31.85% in a month. On February 19, it stood at 12,125.90. By March 19, it has fallen by 3,862.45 points to 8,263.45. The price of Brent crude has fallen by 52.52% in the last one month between the price war broke out in Saudi Arabia and Russia. On February 19, it was $ 58.72 per barrel. On March 19, it came down to $ 27.88. Coronavirus infection may have more than an impact on the world economy. Many countries have imposed travel restrictions.

As far as the stock markets are concerned, the volatility in the short term may persist for the next few weeks. One concern is that if the situation does not improve soon, the current recession may last for a long time. However, to speed up economic activity, central banks of various countries have announced an aggressive cut in interest rates. But it will not have as much effective effect as is needed in the short term. The reason is that until the fear of coronavirus is not completely eliminated, the demand for products will remain weak. There are very few cases of coronavirus reported in India right now. Precautionary measures taken to prevent its outbreak have affected demand in some areas like airlines, tourism sector.

One of the concerns of the market is that there is a huge debt on companies and the condition of banks lending to them is weak due to NPA. The issue has once again raised the way the scheme was introduced to save Yes Bank. What steps the government and the Reserve Bank take to re-establish trust in the credit market will play an important role in stabilizing the market sentiment.

Short to medium term stock markets may remain volatile, but in the long term, there will not be that much volatility as far as industry is concerned. Yes, their activities may fluctuate for a quarter or two while dealing with the current challenges. One should keep the distance from the current selling in the stock market. This decline in the market should be seen as an opportunity to buy good stocks at a lower price. One should invest with a target of at least three to five years. Investment should be done on a regular basis in a period of three to six months. Don't do all the buying together, invest in a few shares and buy at a few intervals.