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The second-wave of covid19 has affected the growth market after a positive growth since Budget 2021. Just like lockdown 1, hospitality, tourism, aviation, manufacturing sectors have taken a hit again. After the optimistic start to the market, there is an ebb due to the number of Covid-19 cases.
Lockdown 2.0 has impacted the economy and also the anticipated growth. After a thumbs up for the Budget 2021, India was slowly regaining its pace. However, the new Covid wave which is more contagious has disrupted the growth and the momentum. The Government introduced various plans under the Atmanirbhar campaign and RBI introduced various measures and allowed the restructuring of the banking sector. Just as things were getting better, the second wave halted the upward growth of the market.
But its not all gloomy. It’s unlike the 30% crash in one month when the pandemic struck. The market breathed a huge sigh of relief as there was no nation-wide lockdown. With the markets moving at a very slow pace, it is much better than a complete halt.
Lockdown 2.0 has its effects on the economy as it clearly shows. Did you know that due to the surge in cases in April, foreign investors pulled out $1.2 billion from Indian Markets. What does that tell you? This second wave phase has impacted the growth and GDP.
Auto, FMCG and electronics sales have been impacted. Passenger car sales have dropped by 10% as compared to March 2021 sales. Due to restricted movement and closures, retail outlets are already witnessing job cuts. The impact of pandemic is going to have a long lasting blow as it seems to be here longer than one had anticipated.
Systematic Investment Plan ensures investments are made on a regular basis in both up market and down markets; it reduces the risk factor through rupee cost averaging. Remaining reinvested during this low phase of the market will help accumulate more units which will generate higher returns during recovery So, for long-term investors, the current scenario is not proper for a lump sum investment, but for investments through SIP in an equity-oriented Mutual Fund.
If someone wants to invest lumpsum, then its best option to invest through STP in next 4-6 months. The investable amount will be invested gradually and one can take the benefit of current volatility. Once the covid situation subsides, the Indian Markets which have underperformed its peers in this calendar year, will again start performing well.
After an optimistic Budget that projected a quick economic recovery, the second Covid wave has thrown out the economy out of its recovery track again. But things are not as bad as the first lockdown, be patient, create short term returns and play it safe.
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