The year 2020 has been a very difficult one till now. The Corona Virus has locked almost all the economies of the world. Most of the countries are struggling to deal with the pandemic. Apart from the health hazards of the virus, the economies around the world have taken a big hit. Amid this volatility, if you are a long term investor, Corona Virus can prove to be a blessing in disguise.
What Makes Corona Virus Good Opportunity to Invest in Stock Market?
Due to the Corona Virus, the stock market has fallen drastically and then recovered quickly too. The downfall led to many stocks falling below their book value or trading at cheap valuations. This gives an ideal opportunity for the investors to buy stocks at the rock bottom prices. When things would turn normal, the same stocks that are available at rock bottom prices may give huge returns in the long run. Therefore, COVID-19 presents a great opportunity of investing in the market.
The main question that arises in the head of investors is which factors they can look for investing in the long run.
Factors to Look Before Investing During Market Fall Due to Corona Virus
Are Promoters Buying
If during the downfall in the market due to pandemic the promoters are increasing stake in the company then it is a good time to purchase the stock for the long term. When the promoters are adding stock it means they are confident in their business and you can add it too. Such stocks are good to add for the long term.
With the rise in the number of patients due to the pandemic, more and more people may take insurance policies. To protect from the health hazards and insecurity due to the pandemic the sale of insurance policies may go up. So when these stocks fall in the correction, it is a good time to add to the portfolio in the long run.
The pharma companies are in the flavor at the moment because all the hopes of curing Corona Virus spread is on them. The money inflow in these companies has gone up and more companies are now participating in developing a vaccine for Corona Virus. Therefore, betting selectively on the pharma companies can prove to be a great deal in the long run.
The pandemic has made everyone to work from home. Also the entertainment sources like movie theaters, parks, etc. are not opening anytime soon. So certainly the demand for the internet is going to see a rise. Also, work from home culture is getting quite popular and more companies are now adapting to this new lifestyle pattern. This makes telecom stocks an attractive bet for the long term.
Stock Broking and Depository Services Stocks
Due to the pandemic, most of the businesses are not working at their usual capacities. The businessmen and even the person who earns the salary are not finding appropriate investment options. In such a case, the stock market may see huge interest from different segments of society. The broking and depository business may see a good rise and the number of new demat accounts opening may increase drastically. This makes stocks of broking and depository services a very attractive bet for the long term.
With the uncertainty of lockdown around the corner due to pandemic, people will keep a good stock of essentials and daily use items at home. This will constantly help FMCG companies to deliver good sales and report good profits. In times of Corona Virus companies that can deliver good profits are a good addition to the portfolio. Therefore, the stocks of these companies must be kept on the radar when the market falls.
The above are some of the points that prove that Corona Virus is providing a good opportunity to invest in the stock market. If you want to learn the art of trading and investing in the stock market, you may visit Nifty Trading Academy. We are one of the leading websites that provide free stock market education blogs and articles. You may subscribe to our website for the latest free updates. For any query or information, you may drop us an email.