The state of the economy during the COVID-19 pandemic and its subsequent impact on the stock market, investors, and companies is something that has been of major global concern these days.
Whenever there is any crisis, there is always an opportunity for the emergence of new businesses, believes Vivek Bajaj, co-founder of StockEdge, a leading financial market analytics app in India.
Despite economic fallout globally, the stock market has seen some dramatic recovery. For instance, the Sensex surged to 24% for the past three months during the lockdown.
In an interview with Business Upturn, Vivek Bajaj said that the stock market is not necessarily the barometer of economic performance but has rather become the barometer of liquidity in the system.
“Stock market is a smart ecosystem that always tries to focus on emerging opportunities. You can see growth happening in the stock market even if the economy is not performing well. A classic new opportunity is an increased need for internet connection and Jio saw this big opportunity. So Reliance stock price which was Rs.1,000 when the pandemic started has become Rs. 2,100 because they capitalized on the new opportunity,” he said. Similarly, he also talked about how other opportunities such as work from home, learn from home, trade from home, stockbrokers providing online training platform has also done well in the situation. “Stock market is a very unique place where we will always see an opportunity in crisis. The trend is upward…. there was a fall because of COVID-19 but it has again come back. The trend will remain upwards, there is no scope for a downtrend in the stock market,” he added.
Regarding the growth of pharmaceutical sector during the pandemic, he said that the API (Active Pharmaceutical Ingredient) driven companies, also considered under pharma sector, which produce the raw materials to make medicines functioning locally have seen considerable growth as we have stopped importing many things from China which was one of our major sources of import. Hence the revenue and demand of these companies such as GMM, L’Oreal, etc. have gone up. But at the same time, the medicine companies saw a revenue boost during the pandemic as people were buying extra medicines and storing it for future contingency purposes. This might not be the case in a post-COVID-19 world.
“Not all pharma companies will do better in the future. But herbal or Ayurvedic pharma such as Dabur and Himalaya will continue to outperform. The whole world is realizing that building immunity is the most important thing. Any company that is into nutraceutical, which supplies nutrient oriented things such as Abbott, Horlicks, Complan which provide health drinks have greater chances of doing well,” he added.
Check out the Full Interview at https://www.youtube.com/watch?v=ouIXhWKQG6s