Unlock rally in hotels, multiplexes and retails stocks may fizzle out

Currently, the Street is ignoring shrinkage of balance sheets and delay in return to normalcy

The gradual relaxation of lockdown restrictions has improved sentiment towards stocks in categories, such as hotel, retail, and multiplex, which have been hit the hardest by the Covid-19 pandemic. Many stocks from these segments have gained 30-100 per cent in the past three months, outperforming the 26.5-per cent rise on the BSE Sensex.

There is little doubt that things now aren’t as bad as they were three-four months back and the market is now looking beyond the 2020-21 financials. However, the key issue is whether the rally will sustain. 

According to G Chokkalingam, founder of Equinomics Research and Advisory, “We