Worst over for economic recovery-related stocks

Just when the world thought it was slowly, but steadily, returning to the ‘old-normal’, the new variant of coronavirus showed us the pandemic wasn’t over. Not just yet.

Omicron, labelled as a ‘Variant of Concern’ by the World Health Organisation, was first detected in South Africa in late November. 

On Wednesday, state governments stepped up their guards with fresh curbs on religious and social gatherings, a day after the Centre asked states to activate war rooms to tackle the rising Omicron threat. They also limited capacity in restaurants and bars, and ordered vigil on the ground

And since then, governments across the globe have put up guards to stem its spread.

Travel restrictions, limited seating capacities, and ban of unvaccinated citizens from visiting public places – governments have been quick in their bid to contain the spread. 

And these fears have yet again hit the contact-intensive sectors, which are still recovering from the wounds of the pandemic waves.

The sentiment resonated on the bourses, too, where shares of companies involved in hospitality, travel and entertainment have fallen like nine-pins in one month.

Barring Lemon Tree Hotels, which managed to rise 11% during the past one month, all the key recovery-related players from the BSE500 space tanked on the bourses. 

The shares of SpiceJet were the worst hit as they declined nearly 24%, others including IndiGo, Mahindra Holiday and PVR dropped between eight and 18%.

In comparison, the BSE Sensex was down less than 3%.

However, with the severity of the virus still unknown, the near-term outlook for these sectors remains in limbo.

Analysts, on their part, too, remain watchful of the evolving situation even though they remain optimistic on these players from a long-term perspective.

For instance, Gaurav Dua, who is Head - Capital Market Strategy at Sharekhan by BNP Paribas, believes the worst may be behind recovery-related players. 
 

Tech charts, too, suggest decent upside in these stocks post a considerable correction. Let’s go to Business Standard’s Avdhut Bagkar for more.Clearly, these stocks have become value-buys after the recent correction, and are expected to give solid return to investors if the economic growth doesn't get challenged by new virus variants. 

Coming to this week’s last session, indices may trade range-bound after three consecutive days of rally.

Yesterday, the benchmark Sensex index closed a with healthy gain of 385 points at 57,315 level, while the Nifty50 shut shop at 17,073, up 117 points.

Data Patterns’ listing and stock-specific action will be the key domestic triggers while Japan’s  data will be eyed on the global front.