News: Cheaper stock prices do not mean they can’t fall further: Bharat Shah -20-04-2020
Updated On : 20-04-2020
Market will readjust behaviour when it has more insights on the virus, says ED, ASK Group.
Just take a look at what we are dealing with for the markets at a time like this. You have had the market weather a lot of storms but perhaps this one has been the most unprecedented given the fact that we do not know what the future holds. I want to get in your take first as to whether or not you think that the selloff that we have seen so far has been overdone or there is a lot more to go because when it comes to the bottom, every one second guessing?
You can predict a rationality of a value but you cannot predict irrationality of the sentiments, which is what gets reflected in the prices. So clearly, none of us really can change as to how long it will take for this disease to pan out and how long it will take before we gain a feeling that we have an upper hand in the fight against this disease and at some stage it will, but how long it will take is anybody’s guess.
Meanwhile if this is the want of the market, the market phase reflects very much into the prices probably. Whatever markets can fear the worst possible assumption at this point of time, the markets have reflected that they will fight it very quickly upfront and if more of insight really will unfold, markets will readjust its behaviour.
If you are talking of a longer period, prices are clearly not just cheap but below the values. But if you are talking about a short period of time, it is anybody’s guess. Cheap prices do not automatically mean that prices cannot fall further. Prices can fall further mainly in and around or may go up; all possibilities are on the table and we are getting prepared for that. All I can say is, if you go by the historical precedence at some stage with a degree of confidence and degree of clarity in terms of being able to control the disease, it can take some time because life in a normal sense will move forward albeit with many precautions.
Virus is not going to go away in a hurry as much as we may wish it to till we find a credible medical solution or vaccine. More importantly, that may take whatever time, but science and technology has moved much faster over a period of time than earlier and therefore, there is a reasonable reason for a hope to be kept.
