Coronavirus Impact: Market ‘Whiplash’ To Continue For A While, Says Max Life’s Mihir Vora

Does the coronavirus-trigerred market selloff present an investment opportunity? Max Life Insurance’s CIO Mihir Vora weighs in.

A medic takes a special lift meant for medics and patients of coronavirus at Gandhi Hospital in Hyderabad, India, on March 2, 2020. (Photo: PTI)
A medic takes a special lift meant for medics and patients of coronavirus at Gandhi Hospital in Hyderabad, India, on March 2, 2020. (Photo: PTI)

The ongoing “whiplash” in the equity markets—both up and down—is expected to continue for a while as new coronavirus cases show up across the world. That’s according to Mihir Vora, director and chief investment officer at Max Life Insurance Company Ltd.

Global cases of the virus have reached 90,441 with the death toll rose to 3,123 as of Tuesday morning. Saudi Arabia, New York City, Brussels and Berlin have reported their first cases while Italy and Iran have emerged as new hot spots apart from China, South Korea and Japan.

On Monday, India’s health ministry announced two new coronavirus cases in Delhi and Telengana, taking the total number of positive cases in the country to five. As the virus spreads, governments and investors have called for a coordinated global stimulus to counter the economic fallout from a possible pandemic.

Global markets witnessed a selloff last week and the beginning of this week, with the Indian indices following their lead, falling around 8 percent from record highs seen in late January. The S&P BSE Sensex, however, rose 0.7 percent on Tuesday while the NSE Nifty 50 rose 0.9 percent. The broader market, represented by the Nifty 500 Index, rose 0.9 percent.

“To contain this, you need to stop a lot of economic activity and that’s what’s hurting the markets,” Vora told BloombergQuint. An intervention by global policymakers is expected, especially because of stock markets' economic relevance in western countries, he said. “Keeping asset prices and market sentiment is a priority because the western world is really dependent on stock market wealth. Less so in India, but the western world is, given the pension funds and so on,” he said.

Speaking about Indian equities and if the selloff marks an opportunity to buy in, Vora said that it is always a good time to buy quality stocks. “Valuation-wise a lot of stocks have come down to their five-year low valuations. Even some of the large-cap cyclicals are seeing five-year low valuations.” When asked if his firm was investing in the large-cap cyclicals, Vora said, “they look tempting”. “By heart I’m a growth investor but some of the names are really looking tempting.”

Also Read: We Need to Prepare for Pandemics. They’ll Keep Coming

However, stocks in globally cyclical industries such as steel, gas and utilities are likely to be the ones to see an earnings cut, if any, because of the coronavirus outbreak and its impact on economic activity, he said.

Watch | Max Life Insurance’ Mihir Vora On Coronavirus’ Market Impact