Weekly Market Review - planning for earthquakes, vaccine by Christmas, & more.
-Weekly Market Review-
Sensex: 39,614.07 ▼ 2.63%
Nifty: 11,642.40 ▼ 2.41%
Planning For Earthquakes
Let’s say there’s an imaginary city. The region that the city is located is in an earthquake-prone zone. The average of all recorded earthquakes in the city is of the magnitude 4.0 on the Richter scale. The highest recorded earthquake was of magnitude 6.5 on the Richter scale. Buildings in the city have been constructed keeping the earthquakes in mind.
How do you think the builders have built buildings in the city?
To deal with a 4.0 earthquake?
To deal with a 6.5 earthquake?
Or more than 6.5?
If builders construct buildings to deal with the average earthquake (4.0), they might survive some earthquakes, but eventually, some other earthquake will knock out the building.
So most builders will build keeping the highest value (6.5) in mind. Keeping only the average in mind in matters of life and death will almost certainly get you killed - fast.
But what if there’s an earthquake greater than 6.5? Then?
Someone might say, “but this city has never had such an earthquake”.
Yes, but isn’t there are the first time for everything?
So maybe construct buildings to deal with 7.0 earthquakes? Even 8.0?
That’s margin of safety. Nobody in the city has seen such a massive earthquake. But if one comes, it’ll destroy everything.
So people plan for earthquakes that might never even come. If such an earthquake does come, these are the people that will survive.
Planning for investments is quite similar. The first priority is to survive to see the next day. Everything else comes after that.
Vaccine & Christmas
Three companies AstraZeneca (with Oxford University), Moderna, and Pfizer have recruited tens of thousands of volunteers and administered trial vaccines.
Towards the end of November or at the start of December, the results of these trials will be unblinded (revealed).
There is a quiet excitement in scientific circles. Those who are very optimistic expect a confirmed vaccine before Christmas this year.
Of course, wide-spread availability will take a few months more but a confirmed vaccine can at least signal the beginning of the end of this pandemic.
Fingers crossed. 🤞
ITR Deadline Extended
The deadline to file income tax returns for the year 2019-20 has been extended to December 31, 2020. It was earlier extended from 31st September to 30th November.
According to the press release by the government, this move has been taken to provide more time to taxpayers.
The deadline in the case of auditable accounts and transfer pricing certificates has been extended to 31st Jan 2021.
More News in Numbers
- 30 Nov: International flights continue to be suspended till this date. Flights under Vande Bharat mission and air bubbles program are not part of this suspension.
- 31 Dec 2020: Date to file ITR extended to this date.
- $2.5 billion: Amount of money that could inflow into the Indian markets due to a change in the MSCI index.
How to choose an ETF?
ETF - Exchange Traded Funds have been popular in the west for quite a long time and are now gaining popularity in the Indian markets too.
Here’s a handy guide to choosing ETFs in India.
NFO Alert
Mahindra has launched a new NFO - Mahindra Manulife Focused Equity Yojana. A focused fund aims to keep the number of stocks it invests in limited and focused. Equity mutual funds usually invest in around 70-90 stocks. Focused funds keep this number much lower.
Mahindra Manulife Focused Equity Yojana will invest in a max of 30 stocks. The Indian automotive sector has seen a revival of sorts. Most major companies have recovered from the shock of the pandemic - even going as far as beating the sales last year.
Markets this week
All percentages above are weekly ups/downs.
HAPPY INVESTING!
SEE YOU TOMORROW
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