Coronavirus has finally started making its presence felt in India. The epidemic has reached a point where it is no more just a passing reference. 125 cases and 3 deaths later, corporate India has woken up to the seriousness of the situation. More companies are now singing the 'work from home' chorus.
Government's response has been to implement a barrage of shutdowns and a series of lockouts. As a consequence, the retailers are fighting not just fearful minds but also dramatically changing consumer preferences.
Consumption: What's hot and what's not?
Consumption items where demand has surged due to panic include personal hygiene products, groceries, instant food items like biscuits and salted snacks and eggs. Online buying has become the most preferred mode of transaction.
Offline retail, travel, tourism, hotels, restaurants, multiplexes, theme parks, cafes, pubs and bars, luxury products including jewellery (as weddings get pushed back) and even semi-discretionary categories like apparel, footwear, cigarettes have come under pressure in the short term.
A significant correction has opened up significant opportunities:
Historically, markets usually rebound the most in 3-6 months post this kind of sharp drops. Except for one instance during the tech meltdown of 2000, markets have delivered positive returns in the subsequent 12-month period.
On average, it takes about 156 days from peak to find a bottom. The current market has seen approximately 62 days under correction with a peak made on January 14 and low formed on 16th of March (with still room to correct).
The market-cap to GDP ratio, a metric used to gauge valuation levels of the stock market, is also at its lowest level since 2009. It is currently at 58%, much below its long term average of 75%.
Overall, there is significant room for markets to appreciate from this point on.