Donald Trump rang an alarm bell in the US, but the Indian markets were fast to catch the buzz. "This could be a hell of a bad two weeks. This is going to be very bad two, and maybe three weeks. This is going to be three weeks like we’ve never seen before." The president warned the Americans about the coming surge in coronavirus cases.
Taking his statements at face value, global markets saw a meltdown as India also broke its recent upsurge. Sensex lost 4.08% while Nifty lost 343 points intraday. Among the Nifty50 stocks, Hero Motors, Bajaj Auto and Titan closed with slander gains while on the downside, Tech Mahindra, Kotak Mahindra Bank and TCS closed with massive cuts. The sell-off has been exacerbated by the flight of foreign portfolio investors. The FPIs pulled a record Rs 1.2 lakh crore out of the Indian debt and equity markets in March-the highest in Asia
Titan: Apt opportunity to tighten its grip further
Titan has seen a collapse in near-term sales. The lockdown impact could be seen across business segments – jewellery, watches, eyewear, fragrances, and others. Halt in discretionary spending and pushback in weddings could mean further pressure on its revenues. Despite the COVID-19 related challenges, Titan is expected to sustain through these testing times on the back of its healthy balance sheet, while other regional/local organized players continue struggling to scale up further.
Key takeaways: As the smaller/unorganized players succumb under pressure, Titan should use the current downturn to gain market share.
Container Corporation of India: Value emerges post recent correction
Container Corporation of India (Concor) has corrected nearly 50% over the past two months. The correction was based on reports, which indicated that Concor might have to buy the land on which it operates half of its terminals from the Indian Railways, for Rs 8,000 crores
Key Takeaway: To purchase land, Concor might have to bear the interest cost of new debt. However, recent COVID-19 led correction has outweighed the negative impact, and the stock now shows good value.
Infrastructure: Concerns are growing over the government's inability to spend
Before the COVID-19 breakout, India's infrastructure sector was already facing concerns like elevated land prices, delay in acquisition and unwillingness of the banking sector to offer credit to the sector. NHAI's plans to award fresh orders have also taken a backseat. The government's overdue to contractors and delay in project completion could severely impact the cash flow situation for the infra companies.
Key takeaway: Now with national lockdown's impact on the Indian economy and growing burden on the government to offer fiscal relief, the Rs 105 lakh crore national infrastructure pipeline seems to be in jeopardy.
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