Covid-hit stocks surge on hopes inoculation will revive demand

While these sectors were ravaged by the second Covid wave and new curbs in many states, analysts said hopes are rising as cases show signs of decline.

Shares of airline, retail and hospitality firms, which have stagnated since the beginning of the year, have perked up recently, as investors expect a rebound in their fortunes as more Indians get vaccinated.

Stocks of entertainment firms PVR, Eros International Media and Inox Leisure, which are still in the red, have gained 9.5%, 4.6% and 6.5%, respectively, since April 20. (MINT)

While these sectors were ravaged by the second Covid wave and new curbs in many states, analysts said hopes are rising as cases show signs of decline.

A faster pace of vaccination will help improve consumer confidence, they said. “Aviation, retail and hospitality are expected to do well once things normalise, and we expect the sectors to witness revenge buying. Although we will also have to view this with the way vaccination progresses globally, we will see a lot of travel booming after complete vaccination. One can take some exposure in these sectors with a little long-term view as it may surprise markets once things normalise post-vaccination. I would recommend being with the leaders within this space as they will be the first ones to bounce back,” said Jitesh Ranawat, head of institutional sales at Marwadi Shares and Finance.

Take the case of online travel company Easy Trip Planners. Despite the steady fall in air travel over the last few weeks, the stock is trading 5% up since listing in March. Similarly, while shares of SpiceJet and IndiGo have fallen nearly 27% and 3%, respectively, year to date, since April 20, these have surged 18% and 8.2%, respectively.

The trend has shown up in other sectors as well. Stocks of entertainment firms PVR, Eros International Media and Inox Leisure, which are still in the red, have gained 9.5%, 4.6% and 6.5%, respectively, since April 20.

Hospitality stocks Wonderla Holidays and Imagicaworld Entertainment; retail stocks Future Retail, Future Lifestyle Fashion, Spencers Retail and Arvind Fashions; hotel stocks Chalet Hotels, Royal Orchid Hotels, TajGVK Hotels and EIH Associated Ltd are up 1-10% in the same period.