Co-written by Abhishek Sudke and Tanay Nagarsheth
Undoubtedly the COVID-19 pandemic has caused a tremendous amount of economic damage especially to the financial markets around the globe. While most businesses are shut and down, there are some that are partially running. This tiny window of opportunity with the businesses that are still running provides an exceptional opportunity to benefit massively by investing in the stock market. This pandemic has shaken the economic roots of the country, but the physical shocks on the real economy of the country come with a silver lining of themselves.
The shocks to the real economy such as technology, infrastructure development, and innovation has created an opportunity for recovery while complementing the sectors that are acting as the temporal alternatives and will continue to be utilized in the post COVID era due to the familiarity it would hold amongst the people. Sectors such as Home appliances, and consumer goods have gained massive popularity due to the imposed lockdowns, a consequence of the COVID-19 nevertheless. Companies like WHIRLPOOL, BAJAJ ELECTRIC, VOLTAS, HAWKINS have increased production and are meeting the increasing demand.
The lockdown and massive reliability on packaged supplies for consumption purposes such as packaged food and vegetables has boosted the Fast-Moving Consumer Goods (FMCG) market by considerable margins. Consumable products have exponentially increased over the lockdown and companies that are keeping up with the increasing demand are DABUR, HUL (especially after HUL and GSK had a merger), NESTLE, BRITANNIA, JUBILANT FOOD, GODREJ CONSUMER PRODUCTS, TATA CONSUMER PRODUCTS, and ITC.
With the internet being the new workspace for most corporations along with the risk of pandemic driving the people to online shopping for enhanced experience and lower risk of pandemic contraction the software and technological sector is in extremely high demand right now. This makes software and technological industry one of the only sectors which does not deal with a demand problem. Companies like WIPRO, INFOSYS, TCS, Tech Mahindra and HCL Tech are promising bets for the long run.
In the wake of this pandemic, the pharmaceutical industry has clearly been one of the biggest winners owing to its very familiar appeal with the people heightening due to the COVID crisis, and the massive paranoia that was generated along with it. For these reasons a safe bet can be placed on companies like LUPIN, JUBILANT LIFESCIENCES, BIOCON, AUROBINDO, CIPLA and SUNPHARMA, as these companies are constantly trying and testing drugs. AstraZeneca has reported that it will roll-out COVID-19 vaccine by September and deliver them to partnering nations by the end of this year. This puts the Pharma sector in a clear driver’s seat in the market for investments.
The lockdowns have also created immense opportunities for telecommunication giants to gain a foothold amongst the people owing to the instrumental need for entertainment and digital connectivity that the mankind needs. This opportunity was clearly utilized by numerous WiFi and telecommunication companies which have been able to generate significant profits throughout the pandemic situation. BHARTI AIRTEL has constantly been rallying on the stock market, and had reached its peak during lockdown, since the promoters sold 2.75% of stake at 8443 Cr it has been decreasing but can be bought at low for a high of 650 by July. IDEA-VODAFONE shares have been rallying in the stock market to a high of 7.75 from 4.15 in a month as Google eye a stake in the telecom company, trying to revive the company and also to create the next big digital ecosystem. Hathway Cable and Datacom Ltd. saw a 114% increase since its drop on 24th March, demand of WiFi is increasing due to lockdown.
Companies like the Reliance Industries Limited has even started preparing blueprints and laying the foundations for the growth of Jio, which is being touted as the greatest telecommunications and internet growth in the Indian business scenario. RELIANCE has been making deals all across the globes and also came out with Reliance Rights Limited, trying their best to be debt free by year end, with JioMart, JioTV, and many other ventures Reliance seems to be promising for good returns in the long run.
However, this pandemic has also brought with its greater losses to certain sectors which were hit badly and would take considerable amount of time to recover. One of the worst hit sectors from the pandemic are Airlines due to the fear of coronavirus, people will take sometime to travel again without any restrictions. Banks are hit in an extremely bad manner as people taking loans and returning it soon is least likely to happen anytime soon– thus increasing the Non Profit Assets, and in turn causing slow growth for the nation. The imposition of lockdown and reduced vehicle utilization has naturally caused the demand of vehicles to drop dramatically. This could very clearly be as people are working from home now. The entertainment industry stretching from Multiplexes like INOX, and IMAX to amusement parks such as IMAGICA and WONDERLA have suffered very badly as they generally cannot ensure compliance with social distancing, and other norms thus rendering them slow growers in the long run. Just as the entertainment sector was hit badly, so has the tourism, travel, and service sector in connexion to these sectors.
Yet, it can be guaranteed that some sectors will pay off in the long term. These sectors are primarily focussed around the ones that have a larger scope in the reconstruction and recovery of the COVID crisis. These sectors include Housing Finances with individuals making money from companies such as the Housing Development Finance, LIC Housing Finances and HUDCO which are good stocks for a high upside. As the construction of resilient construction and structure is necessary in the recovery phase, the construction firms such as Orient Cement, Ramco Cement, UltraTech Cement, Ambuja Cement in the Cement industry, Asian Paints and Berger Paints in the Paint industry are good stocks to hold for a long run, as the construction biz can see a huge potential upside. Chemical sectors with industries such as Aarti Industries, Bodal Chemicals, Himadri Speciality Chemical Limited, Atul Ltd. are companies with an exceptionally good record for performance and are least hit due to the crisis, thereby they have a good upside with low risk. Metal sector with industries such as the Metal Commodity Exchange (MCX), Welpsun Corp, Ratnamani Metals, Hind Zinc, which are the core of construction business showcase a higher potential upside. In the era following COVID, Non-Banking Financial Corporations (NBFCs) such as Bajaj Finance, Bajaj FinServ, and Ujjivan Financial Services have a high evaluation and their stock price has been corrected perfectly due to the crisis.
In the words of Warren Buffet, “I never invest in Technology because I don’t understand it.”, understand the market options available for investing extremely carefully, and keep investing!
Disclaimer: The opinions expressed in this article are that of the writer. The facts and opinions expressed are solely for knowledge purpose and writer holds no responsibility whatsoever.
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