It is thought-provoking to watch the relation between the number of COVID cases in India and the reaction of equity markets.
Interestingly our markets crashed 38 % between February and March 20th when the active COVID cases in India was only below 50 and index hit historical highs when the active COVID case in India was at 85 lakh and nearly 1.3 lakh people died of this infections.
If we compare the India COVID Case chart and the Nifty Chart it confirms that price correction discounted all the negatives early and when the COVID cases actually started to increase equities started moving higher. Stock prices first factored all the negative effects of the complete shutdown and then started to slowly recover on hope that everything will be back to normal once the Unlock phase starts.
Historically it’s proven that when unexpected events or developments occur equity markets discounts these developments very fast. So be fearful when others are greedy and be greedy when others are fearful approach will help investors to beat the market volatility and invest in quality stocks when unexpected developments occur and create long term wealth. Government is formulating policies to realize India’s vision of becoming a 5 trillion economy; it will not be surprising if we see 22000 levels in Nifty50 and BSE SENSEX at 80000 in the next 5 years.