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Last Updated : Feb 12, 2020 03:29 PM IST | Source: Moneycontrol.com

These 6 sectors likely to benefit from fast-spreading Coronavirus

International benchmark Brent crude futures fell $10 a barrel since the China's shutdown, while base metals also corrected in double digit.

Sunil Shankar Matkar

The fast-spreading Coronavirus not only hit the world's second-largest economy China but also rattled nearby countries including Taiwan, Hong Kong, Philippines etc.

The disease has now claimed over 1,100 lives and total confirmed infected cases have crossed the 44,000 mark in China.

As a result, the Chinese government gradually shut down public services, schools and several manufacturing plants since the mid of January, which prompted rating agencies and research firms to cut the first quarter growth forecast of the country.

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But as a rule, one country's loss is another's gain.

China is the largest consumer and supplier of many products in the world, be it spare parts, chemical, toys, lighting, base metals or oil. Many countries including the US and European Union which imported good from China have reached out to other countries to fulfil the rising demand.

India is one such country which has seen heightened demand for its product in the wake of Coronavirus.

We spoke to analysts to know what are sectors will benefit from China's temporary lockdown.

According to them, the chemical sector will be the biggest beneficiary. Other sectors that will flourish include textiles, ceramics, sanitary ware, homeware and engineering goods.

"Chemicals would be the obvious choice but the relationship is not so simple. China is a big consumer and also a supplier of raw materials and intermediates. Hence one will have to go company by company based on publicly available information to deduce the real beneficiaries of the scare (and that too if it lasts beyond mid-February)," Deepak Jasani, Head Retail Research at HDFC Securities told Moneycontrol.

 

As China is the largest consumer, the wide-spreading Coronavirus has impacted several commodities prices including base metals, oil etc, which ultimately helped many companies in their earnings.

International benchmark Brent crude futures itself fell $10/barrel since the China's shutdown, while base metals also corrected in double-digits.

"While the exact impact of the Coronavirus on Indian sectors and stocks is difficult to assess, the decline in commodity prices could positively impact the profitability of sectors like auto, capital goods and other industries in which commodity (steel, aluminium, copper) constitute a substantial part of the raw material," Ajit Mishra, VP – Research at Religare Broking said.

"Also, sectors like textiles, sanitary ware and ceramics players may benefit as India’s exports in this space may increase due to supply constraints in China. Also, a decline in oil prices due to the outbreak of the virus will benefit India’s oil marketing, paints and aviation companies as it brings down their input cost," he added.

Disclaimer: The views and investment tips expressed by investment expert on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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First Published on Feb 12, 2020 03:29 pm
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