How to Invest in the equity market and win in a Post-Pandemic World
May 13, 2020 | 12646 Views
It has been a while since the Indian government declared a nationwide lockdown due to the COVID-19 pandemic. People are curious about what the aftermath of the contagion would look like. It is no surprise that this catastrophic global incident will be followed by changes and adaptation. In fact, the adjustments have already begun.
There is a noticeable shift in consumer behaviour and consumption patterns. Our technology-dependent society has doubled-down on that need since the COVID-19 shutdown. Instead of going to the office, we now log on to the cloud. Due to a lack of access to the cinemas, we now stream from our couches. This modern pandemic has driven people to connect and socialize more than ever, with video calls enabling us to do it from the safety of our homes. E-commerce platforms are taking over the retail industry. Despite grocery stores remaining open as 'essential businesses,' the outbreak has left people afraid to leave their homes. Grocery delivery services have been stepping up to the coronavirus so that the consumers don't have to.
All this has undoubtedly been possible due to the advancements in technology. With people working from home and relying on technology for entertainment purposes as well as socializing, there has been a significant rise in internet usage nationwide. Certain sectors are bound to benefit from these shifts such as E-commerce, telecommunications, IT, etc. In fact, the IT sector is one of the few industries that has managed to continue its business uninterrupted and has transitioned into ‘work from home’ with ease. Chances are, these changes may not be temporary.
Such changes in the consumption pattern and in the roles certain industries have to play in the foreseeable future will no doubt have a significant impact on the equity markets. The market is ripe with major opportunities for the investors to upgrade their portfolios with stocks that will drive the post-pandemic world. However, It is important that investors alter their investment strategies in order to keep up with the dynamics of the changing world. The question which remains is this: Which investment strategy is the most suited to find these gems which will lead through the next decade?
Allow us to share with you our tried and tested award-winning MILARS strategy. MILARS has adopted a very sensible approach to investment. The crucial link between the businesses and their stock prices must never be underestimated. A business struggling to thrive, either temporarily or in the long run, is unlikely to make new highs in the equity markets regardless of the market sentiments. This is why it is recommended to stay invested in businesses that are thriving and are flourishing at a rapid rate. This powerful strategy emphasises that leading companies in the trending industries or sectors are the ideal choice for building a quality portfolio.
For instance, the Automobile sector enjoys quality consumer demand in India considering the demographics. Nonetheless, the automobile industry is hit hard in FY20 as sales have fallen across vehicle segments and is expected to face demand as well as supply constraints in the foreseeable future. Does that mean that the automobile industry is never going to perform? Absolutely not! Indian auto manufacturers still, undoubtedly believe in the potential of the Indian markets. What it means is that it wouldn’t be an ideal choice today for your portfolio considering the circumstances.
According to the MILARS strategy, it is equally important to choose a leading company within the trending industries for one simple reason. These tend to be the stocks that carry the maximum potential to shoot up when the markets show a sign of reversal and the long-awaited uptrends begin. The rationale behind this is again, simple. Leading companies are usually expanding their businesses and capturing more and more market share and are growing rapidly in terms of earnings. Accelerating earnings always add additional strength to the fundamentals of a stock. This means that during uptrends, these fundamentally sound stocks are well placed to obtain quality-price strength resulting in new highs and exceptional gains.
A combination of relevant and decisive factors such as the general market direction, Industry outlook, performance of the company in comparison with its peers, fluctuation in earnings and the price strength of the stock is the basis of the MILARS strategy. Moreover, the distinguishing factor of this strategy is that it has strictly defined selling rules which enables the investors to book unrealised gains and cut losses without delay.
The Indian equity market has already been showing signs of reversal. Now isn’t the time to simply wait things out. Now is the time to reorient our mindsets, revise our investment strategies and prepare for a better world. We at StockAxis, are here as always to assist you with your investments and financial objectives. Upgrade your portfolio by employing the MILARS strategy and stay ahead of the curve in the new and changing post-pandemic world.