Markets in a vulnerable zone: Analysts
Published On: Tuesday, May 11, 2021 | By: Team KnowMyStock
The equity market in India is in a ‘vulnerable zone’ and is likely to remain very volatile, impacted by the sharp rise in Covid cases since the past few weeks that have seen many state governments impose lockdowns and mobility restrictions to check the rampant spread, said analysts. They, however, have ruled out a deep correction for now. From a medium-to-long term perspective, however, most analysts remain bullish about the markets but do caution against the possible earnings downgrades given the sporadic lockdowns and expensive valuation. While lockdowns can weigh on growth expectations in the near term, acceleration of vaccine drives and the overall direction of active cases will still act as the key catalyst for the market.
During this ‘vulnerable phase’ for the markets, experts suggest focusing on four themes – stocks that were underperformers in 2020, offer defensiveness and resilient earnings outlook; those that are disrupted by COVID-19, trade at attractive valuation, offer long-term attractiveness and where risk-reward remains favourable; those stocks and sectors that are Covid beneficiaries due to consumer preferences or changes in industry structures; and are long-term structural winners, though may see some correction in the near-term due to past outperformance.
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