FMCG, pharma shares safe bets in volatile times

Indian investors have lost Rs 11 lakh crore in the last one week, making it the worst stock market wealth destruction in the last nine years. A market storm gathered pace on Friday as stock markets sold off around the world and investors struggled to calculate the economic fallout from the coronavirus outbreak. Our economy had already been in a slowdown masking the underlying fundamentals and if one had been following the macroeconomy, the valuations had already been completely out of touch with reality for months. Coronavirus was just the match that lit the fire and brought the stock market to its senses. Indian stock markets witnessed one of the worst fall in recent years on Friday as the fears of coronavirus turning into a pandemic triggered all-round sell off at the bourses. Hopes that the epidemic which started in China would be over in a couple of months and economic activity would return to normalcy have been shattered. It looks now as if the pandemic could dent world growth. As a result, the BSE Sensex nosedived 3.6% to end the Friday session for the week at 38,297 levels. Major contributors to the decline in the Index were Infosys, TCS, Reliance Industries, Tech Mahindra, HDFC and ICICI Bank. Likewise, the NSE Nifty plunged 432 points or 3.7% to end the week at 11,202. The Volatile India Index (VIX) shot up 29% to touch 22.87 levels. On a weekly basis, the Sensex has slipped 7%, while the Nifty has declined 7.2%. Predominantly, the incessant selling during the week has been done by the foreign portfolio investors offloading Indian stocks worth Rs 9,389 crore on a net basis. While the Indian markets have been following the global trend of stock market rout, there is no issue in India right now as regards the virus. On the contrary, with energy and commodity prices falling, it could be a huge positive opportunity for our country. From a long term perspective, this is time to buy fundamental sound stocks. Companies in the specialty chemical space as well as select multinational FMCG and pharmaceutical sector can be purchased by portfolio investors in these volatile times.
Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.