Vijay Kedia: Don’t keep staring at Sensex & Nifty; focus on individual stocks

There is no doubt that the speed and the scale of Covid-19’s second wave is much more than the first one. But since we have got out of the first one, we will also be able to go out this time as well.

Now imagine many depositors going to banks to withdraw money at the same time. What will happen? Won’t the entire banking system fail? The same is happening at our hospitals now.

In real life, the film sometimes comes first and then the trailer. So the first wave of Covid in 2020 was the film and what we are seeing now is the trailer, or the teaser of that film. That is, if you look at it from a market’s perspective.

As a child when you made a mistake and your father slapped you for the first time, you might have been taken aback and wondered what happened. It takes time for it to sink in. But when you went to him for the second time, you were prepared that you might again get slapped if you made a mistake. Nature is also like our mother-father. When it hits us with Covid for the first time, the reaction was very violent in the stock market.

But this time we are better prepared, at least mentally. Companies have learnt that the reforms and the actions they took during the first wave are giving results now. The markets are ready for even a third or fourth wave. We are now well equipped in several ways to face all the Covid-related challenges. That’s exactly why the market is now back on track after a minor correction. The correction we saw recently was there even before the second wave hit us. So we cannot say that the correction was entirely due to the second wave.

As far as the market is concerned, Sensex and Nifty are not the market. It is most likely that the indices would move sideways over the next 6-8 months. Nifty would swing in the 14,000-16,000 range. Be ready for the index fluctuating in the 5-15 per cent range. Shares of companies whose balance sheets are good and are not impacted by Covid-19 will perform well. It is time to look at individual performances, and not the indices.

So, if you are still worried about the second wave, remember that Covid went away and so will Covid 2.0! Tough times never last but tough investors do!

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