The Covid-19 outbreak has caused distress and shaken up the stock market. You might be wondering how the stock market will look like after lockdown. Should you invest in the stock market right now? If yes, which stocks should you pick up? This article gives you an overview of the performance of the stock market after lockdown and the nearby future of different sectors.
The sharp rise in the coronavirus cases has raised uncertainty about the global economy. The IMF expects the global growth rate will turn sharply negative in 2020 and it can be worse than the Great Depression fallout. The investors’ portfolio will go down by approximately 30-40%. But, can we really predict the stock market after lockdown. Can we surely say that the stock market will go down post-COVID? No one knows or give an accurate prediction. But we can select the stocks to invest in by the performance of the individual sector and fundamental analysis of stocks.
Sector-wise performance of stocks
The stock market indices track the performance of stocks from different sectors. In order to understand the stock market after lockdown, we need to understand how Covid-19 has impacted different sectors and how they are going to revive in the future. Here are some important sectors where there have a considerable amount of shift in consumer behavior and how their stocks are going to perform post lockdown.
The reversal migration of laborers to the village or rural areas will have a positive impact on the Kharif crop season. The pandemic turns out to be a blessing in disguise for the agricultural sector. The laborers who work on a daily basis have become unemployed due to the lockdown. So they will turn back to farming for their daily earnings. The prime focus of government on agriculture will also help to revive the sector.
Healthcare & Pharma Sector
The healthcare and pharma sector will get a new growth dimension during this ongoing pandemic. The individuals with sufficient disposable income will focus on medical insurance. The central and state government are also focusing on heavy investment in the healthcare sector. Recently, the Maharashtra Govt. declared free health insurance to all its citizens under Mahatma Jyotiba Phule Jan Arogya Yojana (MJPJAY). It covers 2.25 crore families and provides a medical cover of Rs 1,50,000.
The Covid-19 outbreak has the encouraged the Make In India initiative and India has emerged as an alternative to China for the sourcing of chemicals and Active Pharmaceutical Ingredients(APIs). This has sparked investor’s interest in the sectors like special chemicals and pharmaceutical because they have gained growth during this pandemic.
The private sector banks with strong capital foundation and adequate liquidity ratio will capture significant market share by providing funds to the individuals, businesses and companies.
Social distancing has become the new normal routine. While, everyone is staying at home the demand for daily essentials has increased. So the online retailers will see a positive impact on the demand and the revenues. Because there will be a change in the behavioral pattern of the consumers. As a result, it will lead to increased sales.
The lockdown after the Covid-19 outbreak has forced everyone to stay home. Due to this, the demand for digital services increased drastically and the telecom sector implemented necessary changes and adapted with the increased demand. The future looks bright for the telecom sector as the shift in consumption pattern signifies heavy dependence on the wireless telecom players. The telecom sector approximately 30-35% of the GDP in the Covid-19 enabled lockdown according to a report.
The hospitality and tourism sector will face a severe hit due to the coronavirus outbreak. The fear of viral infection is going to stay in the minds of consumers for a long time. People will avoid traveling unless in the case of emergencies. These sectors will be one of the worst-hit sectors in this pandemic.
Fast Food chain
The fast food chain restaurants will face a decrease in the demand because of the change in the consumer preferences. The work from home culture will have a long lasting impact on the demand for fast food. People have started to prefer home cooked and cooking as a hobby has gained a lot of attention lately.
The real estate sector will face a tough time during this lockdown. The consumers won’t make an investment in the property because of decreased income. They will also renegotiate their rentals as they have started working from home. The real sector was already facing issues and is under more problems after this outbreak. The co-working spaces will also have a troubled future. The data by PropTiger.com shows that housing sales in India’s nine major cities decreased by 26% in the quarter of January-March 2020
The white goods production was suspended in India since March 25. If the production doesn’t resume in May 2020, the inventory supply will dry up for the first time in the history. The cooling appliance makers were adversely impacted due to the sharp fall in demand. The lockdown affected the peak season of April-May sales. Post lockdown, the customers will avoid buying white goods for some time due to less disposable income.
The Covid-19 outbreak has caused production halt and supply chain disruption. The outbreak will also make it difficult to cope up with BSVI transition. There will be multiple disruptions in the automobile sector due to mobility services and electric vehicles. There will be shift in the consumer behavioral patterns as well because of the prevailing market conditions and income level.
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