Daring The Third Wave
Outlook Money|October 2021
The equity market boom is based on strong fundamentals. Aided by a rapid vaccination drive and economic recovery, India is unlikely to be wounded badly even if Covid breaks out again.
Manik Kumar Malakar

A third wave of the Covid pandemic looms large on India with speculation going rife that the onslaught is expected in a month or two. With its 66 per cent eligible population being vaccinated, the authorities seem more confident this time to fight the pandemic, but fears run high among people about yet another round of lockdown and disruption of social and financial life.

Fast recovery in economic parameters and a booming equity market seem to be soothing the frayed nerves of the investors and also allaying fears of a fresh financial bloodbath. “Even if the third wave hits India in the next couple of months, we don’t see a correction of over 5-6 per cent in the markets as the economy is doing well,” says Shrikant Chouhan, executive vice-president, equity research, Kotak Securities Ltd.

Another positive is that India has started giving more than 40 lakh vaccination doses per day, as per the July average, with the objective of inoculating the entire adult population (approximately 188 crore doses) by December 2021.

“I don’t see the markets correcting due to the third Covid wave. Remember, we did not see the third wave impacting market sentiments in the US and the UK,” says Sunil Damania, chief investment officer, MarketsMojo. He adds that (equity) markets never correct twice for the same reason.

There is the recent precedent of the second wave among market-watchers for this bout of confidence. “If one looks at the impact of the second wave on the market, it was fairly muted, with a correction of 5-7 per cent initially. It recovered over the next couple of months,” says Dhaval Kapadia, director, managed portfolios, Morningstar Investment Adviser India.

This was unlike the onset of the first wave when the markets corrected by 35-40 per cent in India and by similar margins across major global markets. A partial lockdown as opposed to a full lockdown (in the first wave), strong export growth for certain sectors due to resumption in global growth, strong liquidity and availability of vaccines were what kept equity markets buoyant during the second wave.

“In case a third wave hits, the impact on the markets would depend on its severity and spread across the country and on whether fresh full or partial lockdowns are imposed,” says Kapadia.

Besides, the vaccination drive has been picking up. In case of low to moderate severity of the third wave, the impact on the markets may be muted, and in case state or central governments are forced to undertake strict lockdown measures, the impact could be bigger. “Markets may correct at 10-15 per cent during the third wave depending on the (vaccination and lockdown) scenario,” says Palka Chopra, senior vice-president, Master Capital Services.

Continue reading your story on the app

Continue reading your story in the magazine

MORE STORIES FROM OUTLOOK MONEYView All

Daring The Third Wave

The equity market boom is based on strong fundamentals. Aided by a rapid vaccination drive and economic recovery, India is unlikely to be wounded badly even if Covid breaks out again.

7 mins read
Outlook Money
October 2021

Is The Grass Greener For Unicorns?

An unstoppable rally is being witnessed among the start-ups when it comes to initial public offerings. But, once listed, companies fall into the greater purview of the government, the market, and investor sentiments. We talk about the challenges and criticisms these start-ups may face after entering the new domain

6 mins read
Outlook Money
October 2021

Make Your Retired Life A Journey Of Comfort By Investing In Mutual Funds

Retired life can be 25 years or more and you need to work out your finances to make it a journey of comfort. Mutual funds can be one of the best options to park your money for this period when expenses would be more regular than incomes.

5 mins read
Outlook Money
October 2021

Is The NFO Euphoria Good For Investors?

New fund offers are being launched a dime a dozen. But does it make sense for investors to subscribe to them?

4 mins read
Outlook Money
October 2021

I'm a Conscious Consumer

Actor Konkona Sen Sharma has never been a careless spender but now she is a more careful saver.

3 mins read
Outlook Money
October 2021

Dealing With Debt

RBI’s loan restructuring scheme that lasted till September 30 had costs and conditions attached. If you weren’t able to avail of it, here is what you can do instead

5 mins read
Outlook Money
October 2021

Learning The Tricks Of The Trade

A new breed of traders wants to become financially literate before venturing into the stock market.

4 mins read
Outlook Money
October 2021

TECH SHOWS THE WAY TO SMES' REVIVAL

As the Coronavirus continues to exist and move freely across nations, the Indian economy had to stand back at its feet and rebuild itself. MSMEs and SMEs were badly bruised by the pandemic, and its remedy is machine intelligence, data security and cloud computing, among others.

9 mins read
Outlook Money
October 2021

MAKING SENSE OF THE MARKET LEAP

Low-interest rates, corporate deleveraging and retail frenzy push Sensex above 60,000 in September. Let’s understand the rationale behind the bull run and why retail investors need to be cautious amid the euphoria.

10+ mins read
Outlook Money
October 2021

The EPIC of the ERRATIC INVESTOR

The do-it yourself. investors often end up with the wrong stock because they trust what they hear and what they see, instead of what they could learn on their own.

5 mins read
Outlook Money
October 2021
RELATED STORIES

Invest and Rest

Now almost anyone can invest in a hedge fund

4 mins read
Men's Fitness South Africa
March - April 2022

‘HODL': A Typo Takes Hold as a Sound Cryptocurrency Strategy

Late in 2013, with bitcoin prices in the middle of a steep dip, a post appeared in an online forum featuring a misspelling that would become legendary: “I AM HODLING.”

4 mins read
AppleMagazine
March 11, 2022

Need a Hug?

Speculative assets lead a market selloff, but corporate cash could put a floor under prices

9 mins read
Bloomberg Businessweek
January 31, 2022

'The World Is On the Brink'

Less than a year before president john F. Kennedy delivered his Commencement Address at the American University in 1963, the Cuban Missile Crisis had brought the world to the brink of nuclear war.

9 mins read
Newsweek
January 21, 2022

Last Sane Man on Wall Street

Nathan Anderson made his name exposing—and betting against—corporate fraud. But short selling in a frothy pandemic economy can be ruinous.

10+ mins read
New York magazine
January 17 - 30, 2022

When to Launch Something Illegal

Some business ideas are good enough to change the law. But you may never know unless you build it first.

3 mins read
Entrepreneur
January - February 2022

Yes, You Can Grow Too Fast

As a venture capitalist, I’ve seen how “blitzscaling” damages companies, people, and the planet. Now my money is on “responsible growth.”

5 mins read
Entrepreneur
January - February 2022

The Money Game: Anonymous

A Trip to the Meme-Coin Casino “I think this is all stupid and absurd. But I’m not going to complain.”

7 mins read
New York magazine
January 3-16, 2022

India Is on a Tear

Massive modernization presents opportunities for investors.

5 mins read
Kiplinger's Personal Finance
February 2022

3 Times You Need Money Advice from a Human

You can now manage most aspects of your money without ever consulting another human being. You can budget, borrow, save, invest, buy insurance, prepare your tax return and create a will — among many other tasks — by using apps, websites and software.

4 mins read
AppleMagazine
November 26, 2021