Ever since COVID 19 struck, stock markets loom under fear as uncertainty prevails. lt has sent all the stock markets around the world crashing to levels not witnessed since the Global Financial Crisis of 2008. Following the strong correlation with the trends and indices of the global markets, BSE Sensex and NSE Nifty 50 fell by 38 per cent each. Sensex fell from the 2020 high of 41,952 recorded on 14 January to a low of 25,981 on 23 March. Nifty fell from the yearly high of 12,362 recorded on 14 January to a low of 7,610 on 23 March. The total market cap lost is a staggering 27.31% from the start of the year.

While the world has witnessed many financial crises in the past, the last one being the global recession of 2008, the current coronavirus crisis is different from the past fallouts. In response to the current turmoil, RBI and the Government of India have come up with a slew of stimulus measures such as reductions in repo rate, regulatory relaxation by extending moratorium for loan repayments and several measures to boost credit & liquidity in the system. Howsoever the pandemic has impacted the premise of the corporate sector. Delays in receipt of due payments, subdued loan growth, rising cases of bad loans and sluggish business conditions have impaired the growth and the health of the economic activity. Deceleration of GDP growth, supply chain disruptions, cut in discretionary expenses and postponement of CAPEX have been observed during the lockdown, which have led to job losses, decline in household incomes, sluggish demand, reduced travel and hiring freeze. Some of the global rating agencies have predicted a 5% contraction in GDP of India for FY 20.21, against an estimated GDP growth of 5% for FY 19-20.

After the March mayhem, some mouth-watering opportunities are going abegging. Price-to-earnings (P/E) ratios of 85 per cent of Nifty stocks and 75 per cent of Nifty 500 stocks now trade well below their long-term averages, throwing up many value buying opportunities.

Only companies with innovative products, good distribution reach, technology-driven processes and healthy balance sheet could revive the growth momentum post lockdown. Whenever the economy revives, such strong companies will pick up growth in revenue and earnings faster.

The positive side for the Indian economy is the significant correction in the crude oil prices as India imports 85% of its oil needs which is the silver lining, suggest experts. Sectors that are defensive in nature as well as focused towards consumption are likely to do well along with insurance sector.

“An intermittent rally in sectors like insurance, industrial gases & fuels and retail could be possible as the advance-decline ratio of these sectors is greater than or equal to 0.50 on MoM basis,” opined CapitalVia Global Research Limited. Religare Broking advised investors to invest in defensive sectors like Consumer Durables, Paints and Pharma Space as they would be first amongst other sectors that would witness a reversal, with recovery in the markets.

The next bull market for India stocks is likely to mark a change in sector leadership, with consumer discretionary and healthcare taking the baton from financials and consumer staples, according to Morgan Stanley India.

Among the blue chips companies,  Axis Bank, Bajaj Finance, Bajaj Finserv, GAIL, Bharti Airtel, HDFC Bank, ICICI Bank, ITC, Grasim Industries, Larsen & Toubro, Mahindra & Mahindra, Ultratech Cement and UPL are some of the stocks that now trade at P/E values well below their five-year averages.

Ambit Capital in a report listed at least 18 attractive opportunities: Avenue Supermarts, Bosch, Page Industries, Natco Pharma, Sundram Fasteners, Graphite India, Tata Elxsi, Balrampur Chini, Nocil, Jubilant Food, L&T Tech, Dr Lal Pathlabs, Avanti Feeds, Honeywell Automation, Aditya Birla Fashion, Whirlpool and PVR.