Indian Economy during Corona Pandemic – Part 2
Leisure and hospitality: Due to the complete shut down of these sectors, most of them lost the jobs in this sector. According to the US employment report, 29% of them lost a job during the Coronavirus pandemic. Since there is a lot of restrictions, we believe that this sector at least takes 2-3 years to get back to its feet. IT sector starting to work from home and less tourist may impact this sector.
Net result: Extremely affected and expect 30-40% job loss and severe pay cuts in this sector.
Link for : Part 1
Transportation: Another extremely affected sector. Many transportations like public buses and railway were having extreme shut down. The private sector of transportation got a huge hit. Airway transportation was shut down for 3 months and they are slowly getting back to normal. Expect a year for this sector to get back to its feet. A huge pile of debt relief is required to make the sector back to its feet soon.
Net result: 20-30% job loss is expected the increase in fuel price will make this sector perform poorly for the next couple of quarters.
IT : One of the less impacted sectors with a pandemic is the IT sector. Even though the business of several sectors reduced, they cannot reduce the IT budget as this sector is the only source to make the transaction. IT sector is a lagging indicator, this sector does not have any issues until now. There is not much job loss for existing employees but new jobs were kept on hold. Many IT corporation stocks hit all-time high during the pandemic. USA’s IT companies were outperforming, helping the whole world stock market outperform.
Net result: Almost no impact and several positive to outperform compared to the rest of the sector.
Pharmaceutical: Only the outperforming sector due to this pandemic. After several years of underperformance, this pandemic helped this sector to outperform. There is an increased sale of pharmaceutical tablets and no restriction on medical shops from opening helped the sale. Hospital is filled with Corona patients, helping the increase of revenue.
Net result: Outperformance of this sector can be expected for a couple more quarters.
Overall view of Corona on Economy:
People all over the world are expecting vaccination. The impact of is affected sector will continue unless the vaccine is developed and successfully tested. Then people should believe that Corona is not a life-threatening disease anymore. Expecting vaccination by mid of September and the Corona issue should be over by this year-end making this one of the most hated years of this generation.
