The second wave of coronavirus seems to be very dangerous as it has badly hit the Indian economy. With new cases rising every day, state governments immediately came into action and imposed strict restrictions to curb the resurgence.
Although the curb is weaker than last year's pandemic, it somehow has started to affect several business activities.
Like last, the second wave of COVID 19 would heavily impact India’s Gross Domestic Product (GDP) growth in the coming months.
If we talk about business activities and the economy then the Indian stock market is also not untouched by this.
However, pessimism hasn't come up with the equity trading market so far. If you look at the last two month’s data, you will get to know that the NIFTY50 gets down by only 7% from its all-time high of 15,431.75.
Then what's the reason behind the market afloat?
Despite the critical situation across the country, analysts point towards the two factors that still maintain complacency in the stock market.
Several traders and expert analysts said that the global peers are doing well and that's the reason the Indian stock market trading is also performing well.
In other words, Global equity markets in the US have been in a good condition which is the main reason behind the drifts of the Indian stock market, The S&P 500, Dow Jones index touched an up of 4,195 and 34,200, this month.
It clearly shows that global equity markets are performing outstanding well and that makes a positive rub off on Indian equity markets as well.
As of now, we have not experienced a major decline in Indian equities despite having one of the highest infection rates in India - said Mr Sanjay Mookim, Research Head, JP Morgan Chase.
Besides, the hindsight of Indian investors makes the equity market more stable than before. The second wave reminds them of the mistakes they made in last year’s pandemic.
Therefore, they clearly say, even if the index goes down, they also go up. Also, last year, many fund managers made a huge mistake by selling a majority of stocks, this year they wouldn't.
Also, we have seen the equity market has bounced back from its position and hence the aggressive selling has not been done by many people, this time, Majoom said.
Naveen Kulkarni, CEO at Axis Securities Ltd, stated that “Prior experience shows how the stock market made a massive comeback post last year’s pandemic and therefore we don’t expect investors to offload equities hugely this year. This is because as the vaccination picks up the pace, the curve will flatten.
When a nationwide lockdown was announced in March 2020, the Nify50 went down by 13%. After 1 year, shares have grown up by double or sometimes even thrice. A recent analysis done by Mint report, in Nifty500 index, the stocks have shown the growth of more than 50% than last year and 247 stock’s price goes up by more than 100%, which is unbelievable and beyond the expectations of Indian investors.
Besides, the positive factors by global markets, RBI also put its eye on the Indian stock market. The monetary policy members of RBI still get worried about the economic growth. They are not in a favor of complete lockdown in the country.
Experiencing the rising cases of Covid positive, FIIs have sold equities worth $934 million so far this month.
What Should You Do?
Analysts suggest that your portfolio along with asset allocation tells your gain and loss. If you put loads of equity stocks in your portfolio, then it can also be quite risky as the stock market is seeing a bit of a downward trend. Therefore, it is suggested to add some growth stocks to your portfolio as it will minimize your risks.
Earnings Outlook
While the second wave of COVID poses challenges to the ongoing economic recovery, consumers and businesses have adapted to the new normal, and lockdowns are likely to be localised; hence, we do not expect this wave to derail the economy. Therefore, we don't expect any significant impact on aggregate earnings.
Amidst this second wave of the pandemic, some stocks are still performing exceptionally well. Here is a list of stocks to Bet Upon:
6 Economy-Related Stocks to Bet On
1. Divis Laboratories
Divis Laboratories is considered one of the leading manufacturers of Active Pharmaceutical ingredients (API) in the world. As per the reports, the company’s growth looks promising due to the diversification from China into other countries including India.
As many global players try to minimize the dependencies on China and prefer In dia, companies like Divis Laboratories remained well placed to capitalise on such opportunities.
Also, the company announced the construction of the Divis Unit-III Facility at Kakinada, East Godavari District, Andhra Pradesh.
2. CDSL
CDSL stands for Central Depository Service Limited. The company facilitates the transaction and holdings of securities in Demat form and settlement of trade which are executed on a stock exchange.
Other services include KYC services in respect of investors to capital market intermediaries, holding insurance policies in electronic form and other online services such as e-Locker, e-voting etc.
If we talk about the market share of CDSL, it has witnessed a massive growth from 14% in FY14 to 51% in FY2020 in the market share.
3. Dr. Reddy’s Laboratories
We can't ignore the performance of Dr Reddy’s Laboratories. Amidst the pandemic, the company has managed to generate revenue of Rs 4,930 Cr in FY21 which is up by 12%.
4. HDFC Bank
The bank’s strong fundamentals with good quarter to quarter growth makes HDFC one of the best choices among Indian retail investors. The company’s operating profit goes up by 22.83 per cent. Good revenues (up 29.10 %) and the approaching summer seasons are the good factors of this stock.
5. Havells India
The company gave a strong performance, with its operating profit going up by 22.83% whereas the revenues (29.10%) and profit (22.35%) also showed a positive side.
6. Voltas
Volta's growth in FY21 is also fascinating. Its operating profit (53.44% up), revenue (22.14% Up), gross profit (up 22.35%) and a reduction of interest expense make this stock is one of the highest-value stocks in the Indian stock market.
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