Stock Market Crash: What should investors do during a steep fall? Experts advice

The GIFT Nifty is indicating a start deep in the red for the equity markets. US markets too are likely to see pain continuing after the sell-off witnessed across Thursday and Friday. In a scenario like this, what should investors do? How should they position themselves? What lies ahead for the equity markets, particularly in the US? Experts from Morgan Stanley, Nomura and CLSA have shared some advice.

Jonathan Garner of Morgan Stanley recommends moving investor portfolios to a fully defensive orientation, given the weekend developments. "Our US economics team note that the risk of recession has increased materially, while the Fed is less likely to ‘arrive early’ in their view given tariff cost/inflation pressures," Garner wrote in his note. The brokerage recommends bond-proxies, including utilities, telcos and consumer staples.



It has reiterated its "underweight" stance on semis, hardware, autos and cyclicals. While favoured trades like gold and defence stocks may pull back due to positioning, Morgan Stanley recommends buying into the weakness. Nomura's Chetan Seth said that India has to be the preferred choice for Asia Pacific investors who are looking to buy the dip.

He added that US stocks are approaching technically oversold levels but despite that, the valuations are not comforting enough. "Overall, continue to recommend defensive positioning on Asia Ex-Japan stocks, unless the US policy course reverses. We are particularly cautious on Taiwan, Korea and also on Chinese equities," Seth added.

Laurence Balanco of CLSA wrote in his note that there are no signs of capitulation signals being triggered yet in the ongoing sell-off, indicating that selling remains orderly. "While many markets are now exhibiting extreme momentum readings and excessively bearish sentiment readings, the fact that daily momentum indicators are confirming lows suggests any short-term rebounds are likely to limited and followed by further weakness," Balanco added. US markets have erased $5 trillion in market capitalisation during this two-day sell-off, with no asset class being spared.

Indian equities too are poised to open near the March 4 lows after the recent sell-off..