This Crisis Is Once-In-A-Lifetime Opportunity For Investors, Says Hiren Ved

“It is in times of adversity that opportunities arise and if you invest during such times, you will see disproportionate gains,” Ved, co-founder of the portfolio management firm, said. “We’ve seen in every deep correction in excess of 20-25 percent that six months, 12 months may be painful. But if you take a two- to three-year view and if you’ve invested systematically and in good quality companies, you will definitely make good returns.”

Despite the nearly 6 percent jump on Friday, India’s equity benchmarks have tumbled more than 25 percent so far this year, the worst plunge in more than a decade, as the Covid-19 pandemic stalls global demand and trade. Volatility remains at multi-year highs as global stocks continue to swing wildly, only adding to panic. Ved advises patience.

While markets hate uncertainty, they do have the ability to price it in, according to Ved. It’s only when they can’t do that is panic grips investors, triggering a selloff and distorting the real picture, he said, adding that the markets will stabilise once they are convinced that the world is able to manage the crisis and reduce economic disruption.

The quicker the policymakers get things done, the better will it be for the system, he said, adding that he expects to see changes in India in the next few weeks. “We need a combination of monetary and fiscal response. Some fears can go if there is an adequate policy response.”

“Two things are required: Put money in the hands of bottom of the pyramid; GST cut and lower interest rates to help revive demand.”

On Foreign Fund Outflows

Since markets benefit from foreign investments coming via exchange-traded funds, they have to suffer consequences of passive money going out during times of stress when people want to pare risk in emerging markets or in equities. “To that extent, at least, compared to 2008-09, we’re lucky today that the domestic investors and the domestic institutional investors are much stronger to counter some of that, if not fully,” Ved said. Had that not happened, Indian markets would have seen a much worse impact, he said.

On Earnings Impact

While there will be a negative impact, it’s still difficult to determine the extent, Ved said. But he sees positives as well. “With crude falling, you will see raw material prices falling dramatically for many sectors and companies and there could be margin expansion.”

On SIPs

The retail investors in India have shown tremendous maturity, according to Ved. “The fact that the SIP flows have not been impacted despite the fall in the market is a very good sign. I think that retail investors should take advantage of this market fall and systematically invest through SIPs.”