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Shares of airline, retail and hospitality companies, which have stagnated since the beginning of the year, have perked up recently, as investors expect a rebound in their fortunes as more Indians get vaccinated.

While these sectors were ravaged by the second wave of covid-19 and new restrictions in many states, analysts said that hopes are rising now as infections show signs of decline.

The trend has shown up in other sectors as well
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The trend has shown up in other sectors as well

A faster pace of vaccination will help improve consumer confidence, they said.

“Aviation, retail and hospitality are expected to do well once things normalize and we expect the sectors to witness revenge buying from consumers. Although we will also have to view this with the way vaccination progresses globally, we will see a lot of travel booming once countries have witnessed complete vaccination. One can take some exposure in these sectors with a little long-term view as it may surprise markets once things normalize post-vaccination. I would recommend being with the leaders within this space as they will be the first ones to bounce back," said Jitesh Ranawat, head of institutional sales at Marwadi Shares and Finance.

Take the case of online travel company Easy Trip Planners. Despite the steady fall in air travel over the last few weeks, the stock is trading 5% up since listing in March.

Similarly, while shares of airlines SpiceJet and IndiGo have fallen nearly 27% and 3%, respectively year to date, since 20 April, these stocks have surged 18% and 8.2%, respectively.

The trend has shown up in other sectors as well.

Stocks of entertainment companies PVR Ltd, Eros International Media and Inox Leisure, which are still in the red since the beginning of the year, have gained 9.5%, 4.6% and 6.5% respectively, since 20 April.

Hospitality stocks Wonderla Holidays and Imagicaworld Entertainment; retail stocks Future Retail, Future Lifestyle Fashion, Spencers Retail and Arvind Fashions; hotel stocks Chalet Hotels, Royal Orchid Hotels, TajGVK Hotels and EIH Associated Ltd are up 1-10% in the same period.

“In our view, unlike last year, the economic impact of the second wave of covid-19 is not as severe, and business recovery seen in various contact industries like cement, tyre, ceramics, realty, etc., should come back after daily caseload is eased, and states start lifting restrictions. Hence, any meaningful correction in these spaces is likely to be bought," said Binod Modi, head of strategy at Reliance Securities.

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