At the start of the crisis and middle of the crisis, it always feels unprecedented. It always feels like this is the end of the world - financially speaking, said Ashwini Agarwal, co-founder and partner of Ashmore Investment Management India.

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“We have seen that in the previous crisis in the middle of taper tantrums in 2013 and prior to that in 2008; we can rattle off figures and numbers. So this is not new, but what happens is the crisis pass, and as investor one has to stay put, reduce the risk if you have a lot of leverage on books and keep some cash. However, if you have cash then this is the time to be nibbling in; this is when stock prices are beaten down and this is a great buying opportunity from a long-term perspective,” he added.

He said, “The reason I say nibble and not go all in is because you don’t know if it’s going to end up another 10 or 5 or 3 percent down and whether it will take another 2 months or 2 weeks to recover. So, nibble a bit and then gradually keep investing.”

“The other risk that has happened concomitantly is what has happened to oil prices and what has happened to the interest rates in the US and therefore, the other knock-on effects. So that is multiplying the problem that the Western economies are facing and that is the concern for the markets in addition to what the virus is doing at this point in time,” said Agarwal in an interaction with CNBC-TV18.

“So far as Indian stock markets are concerned and Indian investors are concerned, we are domestic economy largely, lower energy prices and lower material prices help the economy. We are very well positioned to do more business with the rest of the world after what has happened in China,” Agarwal further added.

According to him, India needs to use manufacturing opportunity that China has thrown up due to coronavirus hit.

Speaking from a long-term investor’s perspective, he said, “You have to look at where there has been maximum amount of dislocation in stock price relative to fundamentals. So let’s take the private sector banks, which have got sold off in the wake of the developments at Yes Bank and many of them have enough capital to grow, many of them do not have the kind of NPL problems or the scale of the NPL problems that plagued Yes Bank, but these stocks also got sold off because there is a genuine fear that depositors are worried about keeping their money at these banks and my sense is that this fear will dissipate over a period of time.”

“The other area that I would look to nibble into are areas which essentially have domestic demand as key driver; where you are not dependent upon external trade in a significant way because virus as well as developments on the economies in the Western world will put pressure on businesses that are dependent on international trade or exports in a big way,” Agarwal added.

“I do not think demand conditions for IT services will be significantly impacted, but to what extent travel restrictions can impact project rollouts or short-term revenue outlook, one really does not know. Also the tailwind that we have seen in the INR over the last few weeks, I do not see a fundamental justification behind it. Therefore, IT traditionally is a defensive, solid balance sheets, great companies, I do not think there is a problem in end demand but short-term travel restrictions and the USD INR handle might be issues to worry about,” he further added.

First Published:Mar 12, 2020 11:59 AM IST