The current equity market will see lots of small rallies, giving participants trading opportunities both on the upside and downside, similar to that seen in 2008.
That's according to Andrew Holland, chief executive officer of Avendus Cap Alternate Strategies, who sees a lot of pain ahead for companies even as India starts talking about going back to work in phases.
“The problem remains that yes, you may be okay for the next three months, but what happens after that?” he said in an interview with BloombergQuint. “That's what the market will start taking in after some point.”
People are unlikely to change habits quickly after the lockdown ends, he said, speaking about a bounce back in economic activity. While there will be a small bump, India's recovery will be U-shaped rather than V-shaped, and a painful one for industries, he said.
“We need to see what demand is like and then look at industries and their PEs (price-to-earnings ratios)...It doesn't matter how low your interest rates are. If you can't pay your debt, you can't pay your debt,” he said.
“Till then we need to sit on the sidelines and not get so excited and optimistic, unless we get the whole picture. But that's not likely till 2021.”
Watch the full conversation here:
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