In the first part of this article, we discussed how the consumer behaviour is going to change both in the short term and the long term due to the current pandemic. Changes that were going to happen in 10 years are happening right now and that means we as investors should be thinking ahead and investing in some of the companies that will shape the future.
Read part 1 – Coronavirus and Human Behaviour here
Opportunities for investors
The ongoing pandemic will certainly change behaviors temporarily, some maybe even permanently. But this situation also offers opportunities to investors. It is important to note that only those with investable income should invest in stock market right now.
And further, things may become worse before they become better. But if you fall in this category and understand the risks that come with stock investing, there are pockets in the market which may come out stronger post the pandemic.
Stocks and Sectors to BUY post Coronavirus
Pharma & Healthcare
The sector at the top of the list is healthcare. The sector is at the forefront in the war against coronavirus. Whether it is vaccine development, manufacturing machines and equipment, or vital medication for serious diseases, companies into that line of work can be a beneficial bet. Stocks like Dr Reddy’s, Abott India, Lal Path labs, Cadila, Sanofi, Lupin, etc. can be a good long-term bet.
The other sector which can benefit from the situation is FMCG. Companies in the sector manufacture essential daily items ranging from groceries to sanitation and hygiene products. Continued demand for sanitizers, detergents, and soaps could benefit large-cap stocks like HUL, ITC, Nestle, and P&G.
IT & ITES
As the world depends more on tech to live through this pandemic, there will be a systemic change all over the world. Tech companies are seeing the transition of a lifetime and changes that would have happened 5-10 years later are happening as we speak. India’s IT sector is in the middle of all that transition. Tech companies all over the world depend on Indian IT companies and engineers.
Ecommerce, Delivery and online education
While India does not have many listed companies in this space, one company that stands out is Infoedge. With it’s investments in Zomato and Shiksha, it should be able to weather the storm even though Naukri and 99acres are going to suffer.
Read our analysis of InfoEdge here
Artificial intelligence and Virtual Reality
Again, India does not have a lot of direct listed companies in this space, but if you can invest in companies that are indirectly working in these areas, then you might be able to reap some benefits.
Stocks and Sectors to SELL post Coronavirus
Understandably, airlines are going to have a tough time for the next few years. With air travel almost 75% down from the last year, it will take several years for air traffic to get back to normal.
With more and more people working from home, gone are those days when you would splurge your salary on buying fancy clothes. Pajamas and loose t shirts are the new Gucci and Prada. While leisure clothing will do better, fashion clothing is expected to take a big hit
It will take some time for people to convince themselves to buy a new car. With more people working from home, some might even consider selling their extra vehicles at home. You might be able to manage in just 1 car between 2 people.
Oil marketing companies
There will be a huge drop in the consumption of petrol and diesel with air travel at a low and people driving less.
Accessories, Make up and Jewlry
With more people staying at home, the spend on accessries and Jewelry is going to decrease. While people might still buy diamonds and gold from an investment point of view but splurging on purses, wallets, necklace, lipsticks, make up etc is excpected to decrease
In general, you can also invest in beaten-down blue-chip stocks. In uncertain times, such stocks for their industry’s backbone and can be counted on to bounce back better than others. Investing in stocks like TCS and L&T, which are industry leaders, can be beneficial.