share market: Sectors that fell the least will recover earlier & faster: Aamar Deo Singh

How has been your experience working from home? Could this be a new normal for the trading community?
Working from home is both a challenge and an opportunity. At the same time, it’s a learning experience as well. For those whose offices are far off and it used take long hours to commute, it has been a blessing in disguise. However, it needs to be ensured that productivity levels are maintained or improved when one works from home.

The current chain of events has forced all companies to look at this option seriously, and many companies may find merit and are most likely to adopt this. Only time will tell but, yes, a beginning has been made for sure.

Going by your experiences of past bear markets, what has been different or similar this time around?
It has been a fast and furious fall. No one anticipated such a steep decline and complete capitulation within such a short span of time. Even frontline stocks fell like ninepins, as if there is no tomorrow. It had more to do with the fear around the world as to how we shall emerge out of this crisis, and how long shall it take to do so. These questions without any answers at hand led to this sudden carnage. While earlier selloffs in markets were more of a result of economic crises, the current one has been precipitated by a health crisis, which makes it significantly different.

We have seen a lot of share buybacks this month. What signals should one read into these moves?
The current round of share buybacks are attempts by promoters to create long-term value for shareholders, and at the same time, return cash to shareholders, thereby enhance their overall returns. Further, this will help companies improve their key financial ratios over time.

Sectors like metals, banking, auto, realty, capital goods and PSUs have cracked more than 40 per cent year to date. In a rebound, which ones will recover fast, and which ones may take a long, slow road up?

The March selloff was brutal across the board. Stocks and sectors in many cases have cracked 30-50 per cent and it appears that sectors such as consumer goods and durables, pharma, diagnostics and utilities might be the early ones to recover, as the impact on their businesses and stocks has been minimal compared with many other sectors. Also, stocks that have corrected the least are likely to be the ones to bounce back faster in case of a recovery.

So sectors like metals, realty and auto could be the ones where the revival would be prolonged, given the fact that these industries had been facing numerous challenges even prior to the current challenge from the Coronavirus.

If things normalise by the end of April, how much time do you think will it take for the market to recover? Can we expect a V-shaped recovery?
After a steep selloff, markets generally go into a consolidation mode, spanning anywhere between three to six months. But given the current crisis of such magnitude and the fact that global central banks have already started pumping trillions of dollars into the financial system to stave off the crisis, we will have to watch out how this plays out in the coming weeks and months. If the coordinated efforts of governments and central banks pay off, then there is the possibility of a V-shaped recovery. But at present, that is a distant reality.

What would you say should be the investment strategy right now?
The best investment strategy in such times would be to invest in a staggered matter, and focus on quality stocks across sectors, especially those which have been beaten down relatively less, as they reflect the inherent strength. At the same time, one needs to be prepared to withstand volatility for several months.