SECTORS WHICH OUTPERFORM PANDEMIC

INDUSTRIAL IMPACT

Since the impact of COVID'19 pandemic (corona virus), there has been a huge economic loss. Moreover, the economic balance between the industries has fallen because of the imbalance of demand and supply which is largely affected due to lock-down and hike/inflation in the price of resources.

 

Moreover, the impact of this is quite visible on the stock market. So, if we notice the stock price of various companies, we can find that the prices have fallen down since the news of lock-down and pandemic spread.

If you ask me of such examples: -  

1.    SBI card IPO was adversely affected

2.    Vedanta group of industries

3.    Tata steel

4.    PNB bank

5.    HDFC

So, overall the price fell down. But if we notice there are few industries which actually got benefited by the pandemic. There were 2 sectors basically which showed a different result, namely:-

1.    Pharma

2.    FMCG production companies

With the hike in the demand for safety equipment’s and medicines, the pharma companies have gradually benefited.

Moreover since the last time our honorable pm Shri Narendra Modi addressed the nation quoting "Atma Nirbhar Nation" indirectly indicating that the pharma companies are providing a great amount of support by producing safety equipment and other essentials to help our govt. To help fight against coronavirus. So coming back to the point the last traded price of few pharma companies as on 19/05/20 are:-

 

Particulars	LTP 19/05/20	LTP 25/03/20
CIPLA	601.00	378.00
Sun Pharma	438.60	329.00
Lupin	868.00	566.50
Cadila Health Care	337.50	264.50
glaxosmith Kline Pharma	13780.00	1419.00

  

So from the above data it's quite visible that there has been a great jump in share price of pharma companies. Not just this almost every pharma company’s share price has out performed tremendously so imagine if you had invested in cipla for 10 share at 378.00 rupees (total= 3780.00) your investment would have outperformed at 601.00 rupees (total= 6010.00 rupees). The margin would have been about 223.00 rupees per share which results in total earning of 2230.00 rupees within 2 months approx. 

But well now if you invest in these stocks basically they are too over priced in my opinion.

 

 

Coming up to consumer goods producers/fmcg product producers like:-

 

particulars	LTP 19/05/20	LTP 25/03/20
ITC	175.70	139.00
Hindustan Unilever	1988.00	2001.65
Nestle	16317.90	12800.00

moreover, almost every consumer good product producing company’s share price has increased since the pandemic spread and so these 2 sectors outperformed quite well than the other sectors comparatively.

So if you had invested for 10 shares in ITC before pandemic spread at 139.00 rupees (total=1390.00) the share price would have increased at a value of 175.00 rupees (total=1750.00) total benefit of 36.00 rupees per share.

 

Today if you think of buying them, you might feel it bit overpriced. Although these are quite good companies which will definitely perform very well. So even if you invest in them now you have just missed the opportunity to invest in them at a lower market price.