COVID-19: Looking to Invest at this time? – Sectors to Look Forward

The day the World Health Organization (WHO) declared ‘Coronavirus’ a pandemic, the relentless stream of bad news is coming one after another. In just a few weeks, the Coronavirus pandemic has eaten nearly a third of the global market capitalization. Even it has a contusing effect on the Indian stock market. However, it bounced back but only after when it went down by 20 per cent from its peak a few months ago. It continues to take its toll on the Indian stock market. The pandemic has triggered panic across the globe, shaken the confidence of investors. As a result, the Investors are taking comfort that the global markets fell as well. Earlier, it was only equity market and debt markets that were impacted by COVID-19; now both the commodity market and currency market are in turmoil due to the crude oil war between Saudi Arabia and Russia.

Apart from this, many restaurants, cinema theatres, gymnasiums, night clubs, and other meeting places in Delhi have seen suspension in their operations in the exercise of powers conferred by the Government of National Capital Territory of Delhi Health and Family Welfare Department have issued some directions for prevention and control of the outbreak of Coronavirus disease namely COVID-19 with immediate effects.

Read Also: Coronavirus Impact on Indian Stock Market

Sectors that May Do Well Even if Things Go South Due to Coronavirus Outbreak

Things may not look so good as the pandemic has spooked the Indian capital markets but it’s not all doom and gloom. As the COVID-19 reached over 162 countries and territories around the world, the supply chains got disrupted and crude prices tumble. In such a crisis, there are plenty of opportunities for a country like India which can replace China as a manufacturing destination. In fact, some sectors are thriving because of the coronavirus outbreak.

In a report, HDFC Bank said that India has been getting queries from the EU and the US for textile, homeware, ceramic tiles, engineering goods, furniture etc., seeking to replace China as a supplier.

It is not like India is entirely insulated to the Coronavirus but given the circumstances; it could grab this opportunity to come out as an alternative global sourcing base for a wide variety of items. That day won’t be too far when the country will also manufacture rather than just assembly.

There are certain sectors that might benefit from the coronavirus outbreak:

The crude oil war between Saudi Arabia and Russia has already made things worse as it is affecting other asset classes. Plus, the fall in the crude prices already started offering benefits to players who are highly relying on crude and its derivatives.  

India is one of the biggest importers of Crude Oil and its requirements have risen in recent years. With the fall in the crude prices may decline the annual crude import bill of India. If that happens, it will be a big relief for the country’s current account. In the longer run, the stocks from FMCG Space are likely to benefit.

Apart from this, China as the biggest exporter of metal, expected to fall due to Coronavirus Pandemic, which will benefit the domestic producer in the long-run as the manufacturers will look to diversify sourcing base. But, in the short-term, the demand will likely to go down due to global growth.

As of now, China’s annual imports to India stand around at $5,500 million, while exports are below $800 million. But, that could change, giving Indian domestic producers to meet the domestic demand.

Should First-time Investors Play in Such Market?

The recent plunge in the market has made equities quite cheap, posing them as a suitable opportunity to do long-term investments. So, first-time investors should definitely invest in such market but in ‘Quality Stocks’. In fact, this could be a life-time opportunity for investors as the stocks are available at cheap prices and once the coronavirus issue comes under control, the market will likely to move upward.

Investors who are already invested heavily and over-allocated to equities must avoid any further buying. One shouldn’t try to put all the money at once. Instead, let the market settle and make investments in quality stocks with strong fundamentals for a long horizon.

Note: The views and tips expressed here are given by the experts of Invest19.com for information purposes. Invest19.com does not encourage any individual to take any investment decision based on this and advise the users to check with experts before taking any investment decision.

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