It was once again a massive 1,000-point bloodbath on Dalal Street on Monday, 30 March 2020. The Reserve Bank of India’s recent policy actions to calm the markets and inject more liquidity has given no results and returns to the equities. Market Participants are still fearful and lost all the hopes in the market. Even Biggies like HDFC, Bajaj Finance, TCS, L&T, and HDFC Bank have not been exempted from falling.
The small-caps too are following a similar trend. If you are already invested in the equity markets, you’re likely disappointed and feeling one of the most dreadful correction phases in the history of financial markets.
What is even more saddening is that no one on this planet can predict how long the Coronavirus Pandemic will stay, and how sharp and fearful the correction could be.
As I updating from time to time to all my readers and followers, amid 21-day lockdown, there has been a massive in the logistic sector, especially for supply chain disruption. The majority of the companies have officially announced factory or facility shutdown keeping in perspective that the health of workers and employees would be safe and allowing them to work from home wherever it is feasible and viable.
In the end, all these actions, measures and actions will a greater impact that may at least last for more than two to three quarters on corporate profitabilities – a catastrophe that was not all expected by the stock markets. Overall Walth Erosion would be accurately assessed once the markets subside and become confident to rally back.
During this uncertain times, every trader and investor should be fully armored for big volatility swings. And one more important point that we have not yet peaked in terms of new cases, further correction could follow as per the scenario. However, this could be one of the great times to be betting on quality stocks.
From the stock market crash till now, I assume that the correction in the share prices of the company offers a couple of quality stocks will be a lot more than the impact of the event on the long-term fundamentals of the businesses. What will also help is to invest in the opportunities in smaller parts, to make the most of the volatility, fear and panic selling in the markets?
But for those who are investing with a Long term view, and should have ability to handle future market volatility and roller coaster rides in coming quarters and still keep on holding without any fear of panic selling or losing sleep. If we come out of this mess in some months than this would be a multi-decade opportunity to grab this quality stocks at fairly reasonable valuations.
But the main question is where should one invest in this Uncertain Times?
While the news and situation around us is all inauspicious and bleak, there’s an empowering advancement in some quality small-caps.
It’s in regards to the insider purchasing the shares of the company in March 2020 – a month that has carried us up close and personal with Coronavirus emergency, that appeared to occur in far off terrains until February.
Like I referenced before, while it is hard to evaluate the specific close to term effect of Coronavirus emergency on organizations and there could be instability in the near term; ongoing promoters increasing their holding in these smallcaps demonstrates that business sectors have estimated in a ton more terrible than what is justified. With an amazing purchasing approach, one could benefit as much as possible from the present negativity in the market.
I accept these could be incredible levels for first time purchasing for the individuals who have no introduction in these stocks up until this point. In the event that one as of now has a presentation, one could consider averaging as per the size of the portfolio.
I trust you will take advantage of this chance to profit by the smallcap bounce back.
For an investor, one of the most painful things to watch is to see his portfolio suffer sharp declines in value.
An unanticipated event – COVID 19 outbreak has put one and all in this unpleasant situation.
No one knows for sure how severe the crisis could be – in terms of a toll on health, lives, livelihoods, economy and corporate profitability, and how long it will last.
Amid 21-day lockdown, there has been a massive supply chain disruption. Most of the companies have formally announced plant closures keeping in mind the health of the workforce and resorted to working from home wherever it is practical.
All this will indeed have an impact that could last for more than a quarter – an impact that was not priced in by the markets.
The damage will be assessed once the crisis subsides, and the estimates will be revised then.
In the meantime, one should be prepared for volatility and further correction.
One more thing, from the sell-off so far, I believe that the decline in the stock price will be a lot more than the impact of the event on the long-term fundamentals of these businesses.
For those with a long-term horizon, and the temperament to withstand sharp down-moves without losing sleep or panic selling, this could be a multi-decade opportunity to get in quality stocks, at mouthwatering valuations.
This comes with a caveat. One must ensure enough liquidity in case the crisis prolongs…And never violate the allocation guidelines.
What will also help is to invest in the opportunities in a staggered manner, to make the most of the fear and panic selling in the markets?
In the last few days, I have shared some stock-specific opportunities with you amid the ongoing crisis.
Today, I want to share another interesting update with you.
It’s regarding the insider buying in March 2020 – a month that has brought us face to face with Coronavirus crisis, that seemed to be happening in distant lands until February.
Peter Lynch has said:
“Insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.”
Like I mentioned earlier, while it is difficult to assess the exact near term impact of Coronavirus crisis on businesses and there could be volatility in the near term; recent promoter buying indicates that markets have priced in a lot worse than what is warranted.
I believe these could be great levels for fresh buying for those who have no exposure in these stocks so far. In case one already has an exposure, one could consider averaging within the allocation limits.
Here’s the list of the open positions where promoters have increased stake and look attractive from a long- term perspective.
Stocks Where Promoters and Insiders Have Increased Stake in the month of 31 March 2020.
- KRBL Ltd Buy in the range of 120-125.
- Bodal Chemicals Buy in the range of 35-38.
- Control Print Buy in the range of 140145.
- Monte Carlo Fashions Ltd Buy in the range of 120-125.
- GHCL Buy in the range of 70-75.
- Technocraft Industries Ltd Buy in the range of 145-150.
- Kabra Extrusiontechnik Ltd Buy in the range of 35-36.
- Nilkamal Ltd Buy in the range of 880-900.
- Cosmo Films Ltd Buy in the range of 185-190.
- Sanghvi Movers Buy in the range of 40-42.
- Cyient Ltd Buy in the range of 200-210.
- Moldtek Packaging Ltd Buy in the range of 145-150.
- Mayur Uniquoters Buy in the range of 120-125.
Since it is best to adopt a staggered buying/averaging approach amid these unpredictable times, As with this all the info provided above I am concluding this article and will update from time to time. There will be more opportunities than I’ll share through special updates. Please stay tuned and be connected do keep a track of them.