Anticipating Reality As ‘New Normal Post COVID-19
The market participants are gradually getting acquainted with the ‘new normal’ of lockdowns, social distancing and quarantine. At the same time, they are also getting used to the ‘new normal’ of the rating agency, which is downgrading the growth forecast of the country, as a result of the uncertain impact of COVID-19. Recently, ICRA and Goldman Sachs have joined the chorus line for lowering GDP forecast of India. Goldman Sachs has lowered its real GDP forecast to 1.6 per cent for FY21, from 3.3 per cent earlier while, ICRA estimates Indian economy to grow by two per cent in FY21. However, the bulls seem to be the least affected with these downgrades, as they have factored the negative impact of the virus in the recent fierce fall. Nevertheless, they have come out of COVID-19 quarantine by posting biggest single day gains since May 2009 this week.
Nifty has recovered as much as 21 per cent from the lower levels after falling nearly 40 per cent from its 2020 highs. With this sharp move from the lower levels, it appears as if the markets are making some sort of peace with the situation. As we dig deeper, the joker in the pack in the last two weeks has been Nifty Pharma index. It has gained as much as 40 per cent from the lower levels and relatively outperformed the headline index as well as also managed to cross the its swing high, which was registered in the last week of January 2020. As the legendary investor Benjamin Graham has quoted, “The intelligent investor is a realist who sells to optimists and buys from pessimists.” Similar strategy was adopted by us when everyone was talking about the challenges faced by pharmaceuticals companies.
We have been frequently recommending stocks from pharmaceuticals sectors in our fundamental as well as in technical section over the last couple of months. I’m sure our subscribers are reaping solid gains of being an early entrant in the sector, which is now the talk of the town and their portfolio is also in pink of health.
Everyone is asking the same question these days: when will the virus go away or whether the lockdown will extend or not? From a common man to a CEO of big corporate house is wondering what the future holds. We all want things to go back to normal eventually. However, what we believe is that post Coronavirus, there will be a change in business and all of us will have to adapt to this shift as ‘new normal’ in all aspects of the life like living, working and building relationships. For example, many schools have planned to start the new academy year if the lockdown extends on an online platform. All the students are logging in from an electronic device to attend the class while, this used to be happier in the past but ultimately, this will be the ‘new normal.’
Technology and business automation will be the backbone of business. Meetings, conferences and public events will get smoothened with technology like Zoom & Skype. Business like sporting events, cinema halls, bars & restaurants, which are harshly jammed by Coronavirus outbreak will have to rejuvenate itself at a faster pace and try to bounce back to get into the groove. For example, in bars and nightclubs, where people usually asked for age proof, now along with that, they might ask for a proof of immunity displaying that you’ve already recovered from or been vaccinated against the latest virus strains. Further, governments across the globe will start to rethink about the medical facilities and will try to develop robust medical facilities to combat such disasters in future if they reoccur.
Change is inevitable and a global pandemic like COVID- 19 is setting the ground for a change in business as well. India is likely to gain big as many businesses from across the world were completely dependent on China for everything i.e. from key raw materials to different parts to finished product. However, post this crisis; many businesses may shift their dependency base from China to India.
