-: The Indian Markets and Coronavirus: Fear Mongering without data backing:-

The domestic bourses got spooked today due to

Photo: The Street 

twin effects of the fear mongering by the international media on the issue of coronavirus and Moody's cutting India's FY20 growth forecast to 5.40% (from 6.60% earlier).

The coronavirus outbreak has been made a scapegoat to hide the wrong policy decisions of the government of India and the riots in Delhi, post  irresponsible - communally - charged -provocative - speeches by some elements of the Indian political class. 

Anyway,  if we go by the media reports then,  we will see that during the last SAARS attack,  the Chinese GDP growth shrank by a mere 0.50%. This data assumes significance as China contributes to around 16% of the GDP.

However,  India contributes 7.45% and the US 15.20% of the world GDP,  which is a significant figure -- both the countries are almost unaffected by the coronavirus epidemic.

2ndly, the international media is giving only one side of the story, without taking into consideration that if there is a pandemic then production from the affected counties are likely to fall pushing up demand quotient. If factories closes down, will there not be a shortage, especially of essential commodities like food, fertilizers, metals, etc? 

In other words without assessing correctly the demand - supply scenario, crooning the same hashtag of "Supply Chain Getting Affected", doesn't mean much -- if there is a demand shrinkage there would also be production cut. 

Moreover, the fall in WTI Crude to $45.52/barrel, Brent Crude to 50.11/barrel and Natural Gas to $1.717, augurs well for India, especially the Power,  Auto and Fertilizer sectors which are getting sold into.

I feel every opportunity is a BUY for the investors as the Nifty is likely to get a bounce from the oversold positions at 11230/11100, as this overblown fear factor gets subsided by the next week. A bull market builds on too much negativity.

The surge in Bitcoin (2010-2017), Tech Stocks (1995-2000,) and Silver (2009-2011) had the following factors:
#Consistent Rising Prices
#General Exuberance or Euphoria
#Fear of Missing Out.

This time it would be the Fertilizer stocks, if the NDA government walks the talk of decontrol of urea and a cut down in gas prices from April 2010. 

But, having said that, I would like to mention that, like many of you, I also have doubts on implementing abilities of the amateur PM, who is more seen in globe trotting backed by public funds, a "Gun Clerk" type,  President, a FM, who has no connection with the ground realities of Indian macroeconomic scenario and an equally appalling home minister. 

Hope,  the world equity markets, would soon be out of excessive pessimism and crowd mentality, anchored on the coronavirus outbreak.