Included in this article –
- What’s happening?
- Impact on India.
- Positive impact on India – falling fuel prices.
- Impact on equity markets.
- Suggested investing action in this period.
Coronavirus has so far infected more than 60,000 people worldwide and claimed the lives of over 1,400 in China—surpassing the toll from the SARS outbreak of 2002-03. The World Health Organisation (WHO) has officially declared it a global health emergency.
Impact on India?
China is India’s biggest trade partner.
Kotak Institutional Equities highlighted that India is relatively immune to a slowdown in Chinese activity
“Imports from China are mostly in electrical, electronics, chemicals, plastics and metals sectors while exports to China are concentrated mostly in chemicals, petroleum products, ores and fish. Companies will be able to tide over in the near-term, though prolonged production stoppages will have supply risks for import-dependent sectors,” Kotak said.
Positive Impact on India – Falling Crude
China, the world’s largest consumer of crude oil, has sent prices of crude crashing to 2018 levels. Oil prices have slid 25% from the January peak, offering big relief to the struggling Indian economy.
Global Crude Oil Prices
Domestic Fuel Prices
Impact on Equity Markets?
As past data suggests, six months after such events, markets were up again.
Investing during times of volatility
Outbreaks like the one in China can lead to uncertainty and volatility in the stock market and it’s normal to feel anxious about investing at such times.
But market volatility is actually beneficial for mutual fund SIP investors.
SIP helps capture markets at lows and hence, helps in cost averaging to boost returns for your investments.