HCL Tech, InfoEdge, Biocon and their peers may be safe stocks to hide for the rest of 2020

HCL Tech, InfoEdge, Biocon and their peers may be safe stocks to hide for the rest of 2020
Bombay Stock Exchange.BCCL
  • The COVID-19 pandemic has brought economies of several countries to a standstill, but four sectors have outperformed others to emerge as winners during this crisis.
  • The growth across these four sectors, namely, tech, home improvement, biotech and ecommerce suggests that consumer demand is still growing.
  • On the other hand, banking and industrial sectors underperformed, primarily due to the investors moving away from risky options.
Globally, stocks from technology, home improvement, biotech and ecommerce sectors have been better bets during this COVID-19 pandemic giving a return of up to 22%, according to JPMorgan, which advised the risk averse investors to stick to these sectors for the second half of the year.

In India, that could mean some marquee stocks like TCS and Infosys to Biocon and Sun Pharma, from Kajaria Ceramics and Hind Sanitaryware to InfoEdge and IndiaMart.

On the other hand, sectors like banking, crude oil, industrial metals have fallen by as much as 30% from their 52-week highs, according to a report the investment bank dated June 18.

Technology sector – Average stock growth 6%

CompanyPerformance since March 2020

Big tech companies registered high growth as work from home solutions gained importance over the lockdown period. Overall, FANG grew by 22% while the global tech sector grew by 6%.

FANG refers to Facebook, Amazon, Netflix and Alphabet (the parent company of Google).

CompanyPerformance since March 2020
HCL Technologies31%

While India does not have giants like the FANG, top Indian tech companies benefit from the growth of these companies aside from increased adoption of technology in India too.

Home improvement companies – Average stock growth 11%

Despite the lockdown in place, the home improvement sector grew by 11% in the US. As economic prospects dwindled, potential home buyers decided to renovate their homes temporarily.

CompanyPerformance since March 2020
Home Depot32%

The sector was led by companies like Lowe’s and Home Depot. These retail chains specialize in offering home improvement solutions like appliances, furniture, flooring, home décor and more.

Growth in the Indian home improvement sector was led by Somany Ceramics and HSIL (Hindustan Sanitaryware). Established players like Berger Paints and Asian Paints declined by nearly 1% in the same period.

CompanyPerformance since March 2020
Somany Ceramics53%
Asian Granito7%

Biotech companies – Average stock growth 10%

Pharmaceuticals and biotech companies have been the investors’ favourite since the pandemic. These stocks didn’t really fall as much as the other sectors but still gained about 10% on average since the end of March.

CompanyPerformance since March 2020
Vertex Pharmaceuticals23%
Gilead Sciences4%

The Indian drug makers created a lot of wealth for their investors with Wockhardt leading the charts with a 55% jump in its share price.

CompanyPerformance since March 2020
Sun Pharma40%
Dr. Reddy's Laboratories29%

Ecommerce – Average stock growth 15%

Despite being under tremendous pressure throughout the lockdown, the ecommerce sector grew by a healthy 15% in the US.

CompanyPerformance since March 2020

While smaller players like Wayfair tripled their market capitalization in this period, ecommerce giant Amazon added more than $360 billion to its market capitalisation.

CompanyPerformance since March 2020
Info Edge37%

While India does not have comparable listed ecommerce companies, two of the prominent ones IndiaMart and Info Edge delivered healthy double digit growth. While IndiaMart offers its solutions to businesses, Info Edge offers services like job hunting (Naukri.com), real estate and education classifieds, among other things.


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