The World Has Indeed Changed
Thursday, Mar 12, 2020
The markets posted biggest fall ever, today and ended 2,919 points down. With sentiments taking hit where it hurts the most, investors are left to panic.
Mr. I V Subramaniam, Director, Quantum AMC shares his thoughts.
The Sensex declined by 8.2% today and by 20.5% YTD. The decline in share prices has resulted in trailing twelve month PE ratios declining from the peak of ~28x to ~20x currently. MTD FII have sold to the extent of $ 3.1 Billion and the local mutual fund buying of $524 Million, could be no match for it.
The inflated equity prices without earnings growth was at risk anyways and the Corona virus plus the announcement of takeover of Yes bank was probably the last straw that broke the camel’s back.
While one has to be careful from getting infected by the virus, the panic in the market could also be an opportunity. We are using the opportunity to reshuffle the portfolio towards companies that can sustain the slowdown in the economy and a changed macroeconomic scenario where rupee could slip and inflation could be higher. In cautious markets we see opportunities and are deploying cash.
The silver lining is that the 10% higher than normal rainfall last monsoon looks to have resulted in a record winter harvest. This could act as a cushion to the fall in economic growth.
The normal operations of research in companies continue. Precautionary measures taken by companies in India to prevent spread of COVID 19, will impact our ability to go and physically meet companies or visit factories, but through con calls we are able to reach out to companies, speak with them and assess the risk they are facing or the opportunities that are coming their way.
We have allowed our staff to work from home or to visit our satellite office in the suburbs rather than travelling to our main office by undertaking a journey in the crowded trains or the crowded streets.
Our advice to investors is to stay invested and allow the fund manager to change the portfolio to meet the new realities.
The world has indeed changed.
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The views expressed here in this article / video are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. Quantum AMC / Quantum Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investments made in the scheme(s). The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The article has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of this article should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments.
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Please visit – www.QuantumMF.com to read scheme specific risk factors. Investors in the Scheme(s) are not being offered a guaranteed or assured rate of return and there can be no assurance that the schemes objective will be achieved and the NAV of the scheme(s) may go up and down depending upon the factors and forces affecting securities market. Investment in mutual fund units involves investment risk such as trading volumes, settlement risk, liquidity risk, default risk including possible loss of capital. Past performance of the sponsor / AMC / Mutual Fund does not indicate the future performance of the Scheme(s). Statutory Details: Quantum Mutual Fund (the Fund) has been constituted as a Trust under the Indian Trusts Act, 1882. Sponsor: Quantum Advisors Private Limited. (liability of Sponsor limited to Rs. 1,00,000/-) Trustee: Quantum Trustee Company Private Limited. Investment Manager: Quantum Asset Management Company Private Limited. The Sponsor, Trustee and Investment Manager are incorporated under the Companies Act, 1956.