Rising coronavirus cases and fears of a lockdown led to a knee-jerk reaction on D-Street on April 12, pushing the Sensex and the Nifty below crucial support levels. If the restrictions get extended to states other than Maharashtra, the trade will shift to defensives, Nilesh Shah, Managing Director, Kotak AMC, said in an interview with CNBC-TV18.
“If the economy goes into a lockdown-like scenario then defensives like IT, pharma, and FMCG will do well and, if economic momentum continues, then cyclical are likely to do well,” says Shah.
Maharashtra, which accounts for around 13 percent of India's GDP, has been recording the highest number of coronavirus cases in the country for days, with state capital and the country's financial hub Mumbai among the worst-hit cities. The state government has already imposed a string of restrictions and may go for a lockdown as the healthcare system comes under severe strain.
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India hit a new coronavirus infection record with 1,68,912 new cases, the highest single-day rise so far, taking the total tally of cases to 1,35,27,717, according to the latest Union Health Ministry data.
Commenting on broader markets, Shah is of the view that even though there was a sharp run-up in the broader market space, for the long-term, assuming COVID cases would come under control, investors should put money in this correction.
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The market is factoring in the impact of possible lockdown in various parts of the country on the June quarter results. The lockdown-like scenario will not impact March quarter results but management commentary would be eyed.
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History suggests that organised players have done well post the lockdown as compared to the unorganised sector. Hence, largecap companies or sectoral leaders could benefit the most post the lockdown.
“Market is trying to guess what could be the impact of lockdown on June quarter numbers and trying to take a correction. Post-lockdown, listed companies or organised sector does far better than unorganised sector,” says Shah.
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