Sectors that weathered the Covid-19 storm

This March has been brutal – and the hiding places for investors have vanished by the hour. Yet, there are a few market pockets – unglamourous, dull, but predictable – that stand to benefit through the crisis.

These sectors are utilities, local pharma, diagnostics, consumer goods and durables, agrochem and fertilizers, where the business and stock price impact have been relatively less pronounced. In some cases, businesses may, in fact, benefit from this disruption.

The broad-based sell-off makes it imperative to identify businesses where the adverse impact will be the least — and probably the last from a timeline standpoint — if things worsen in India due to the lockdown.

In some sectors, the earnings impact is low and these will also be the last to get hit, if the virus situation deteriorates. When the dust settles, stocks from these sectors will quickly bounce back, according to analysts.

“For pharma companies such as IPCA, Torrent, Abbott, Sanofi and Pfizer, business impact is likely to be low given the domestic business model and product portfolios that are aligned to chronic illnesses while agrochemicals and fertilisers will have low impact as we head into April and May, given the importance of agricultural products,” said Alok Deshpande, analyst, Edelweiss Securities.

Other stocks such as Divi’s Lab will be the beneficiary of accelerated migration of manufacturing from China and SIS India would benefit as the crisis will essentially wipe out several unoragnised players in the security business, which will face supply issues and the lack of adequate training, he added.

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