That said, although the market is quite disappointed with the stimulus measures announced, I am happy because had the government really opted for a huge infusion of liquidity via printing currency, the long-term outlook of the Indian market would have been severely impacted. In the short-term, the market is expected to fall between 2 - 5 per cent given the lockdown extension and the policy measures.
For investors, it is advisable to not to invest in equities via borrowed money / leveraged position. One should set aside up to 20 per cent of cash and invest largely in businesses that are up and running, such as pharma, essential goods like fast-moving consumer goods (FMCG), select chemical firms, and telecom. Markets
have rewarded investors in these businesses in such a challenging time and, in my view, these firms will continue to do well going ahead.
Investors will be better off not investing in high beta stocks such as infrastructure, banking, or non-banking financial companies (NBFCs) as there is still a lot more pain left in the economy.
G Chokkalingam is the founder and managing director at Equinomics Research
(As told to Swati Verma)