CAN WE GO CONTRARIAN ?

about 5 months ago
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If the market is looking ahead and not exactly falling off the cliff into a deep plunge, why can’t we also have this foresight?

99% of the Indian media is being a vulture, gnawing at the dead and spreading fear. We all have become virtual PhDs and doctors in Covid; right from home remedies to drugs, we all know what to take. And we all seem to revel, while suffering mental anguish at the same time, in reading and forwarding one negative news after the other.

Yes, currently the situation is India is very, very grim and we all are learning a very important life lesson – death is the only certainty. The industries all around, barring some of the pharma companies, labs, oxygen cylinder makers, metals and a handful of few, everyone else is suffering.

But instead of trying to add on to the misery, we decided to take a look at some countries where life is slowly limping back to some normalcy. And in these countries, we are trying to see where demand is at its peak, maybe more than pre-covid levels – that will give us an inference as to what to expect when things better- they always get better; darkness cannot remain forever.

So here is a list of ‘things’ which are seeing huge or rather, pent-up demand taking over; we can extrapolate that to our sectors here – these are the one’s which will bounce back the fastest as things improve:

There was a survey conducted in the USA in March and it shows that maximum spend will be on rest and relaxation. While not many are yet comfortable to board a plane, the survey shows that the industry to benefit the most is -travel. Every demographic is excited about vacationing, with 63% of the respondent excited about going on a vacation. This means boom time will be back for hotels, car rentals, F&B, and all interlinked with travel.

Equally high pent-up demand is expected in going to movies, going back to the gym, going to a concert/sporting event and many are raring to travel abroad. The US Travel Association expects around half of Americans set to take a trip in the next three months.

Amusement parks are also big on the list- after staying huddled at home so long, fun and family outings is expected to the theme. Season passes at some amusement parks in USA are sold out.

Airlines are seeing more people shopping for flights on their websites and they are getting more queries through travel agencies. They are seeing booking volumes build.

There is also expected to be a huge pent-up demand for retailing – going back to the malls will become a huge thing once things improve. A lot of people enjoy browsing in stores, especially after months of forced online shopping. 

Moody’s, the credit rating agency, has reported that there may be as much as US$5.4 trillion in pent-up spending waiting for the post-coronavirus world. This is 6% of the annual global economy.

Well, this will be the immediate release of pent-up demand and maybe in India too, we will see the same trend. So, the industries suffering the worst today, will be the best picks when things start improving. Hospitality, airlines, movie theaters, gyms, event managers, amusement parks, movie production houses, travel operators, logistics companies – these will be best picks if you have the guts to go contrarian now – the wait will be longer but the gains will be worth it.

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