Covid impact on selected sectors of indian stock market sanika yadav

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Sanika S. Yadav
ANNUAL REVIEW
S U B T I T L ECOVID-19 impact on selected sectors of
Indian stock markets
-Sanika S Yadav

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Sanika S. Yadav
CONTENTS
Introduction
Sector wise impact on Indian Stock
market
Pharma Sector
Automobile Sector
IT Sector
Conclusion

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Sanika S. Yadav
INTRODUCTION
 Ever since COVID 19 strike, markets loom under fear as uncertainty prevails. It has sent
markets around the world crashing to levels not witnessed since the Global Financial Crisis
of 2008.
 Following the strong correlation with the trends and indices of the global market as BSE
Sensex and Nifty 50 fell by 38 per cent.
 The total market cap lost a staggering 27.31% from the start of the year. The stock market
has reflected the sentiments this pandemic unleashed upon investors, foreign and domestic
alike.
An overview of Pre and Post COVID effect on Indian Stock Markets
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1-Jan-20 1-Feb-20 1-Mar-20 1-Apr-20 1-May-20 1-Jun-20 1-Jul-20 1-Aug-20 1-Sep-20 1-Oct-20
Nifty 50 & Sensex movement pre and post COVID-19
Sensex Nifty

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Sanika S. Yadav
SECTOR WISE RETURNS ON STOCKS
POST COVID-19
 Companies have scaled back; layoffs have multiplied and employee
compensations have been affected resulting in negligible growth in the last
couple of months.
 Certain sector such as hospitality, tourism and entertainment have been
impacted adversely and stocks of such companies have plummeted by more
than 40%.
Here is the 1-year performance comparison of Sector Indices
(As on 30th
September 2020)

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Sanika S. Yadav
COVID-19 IMPACT ON
PHARMACEUTICAL
SECTOR & SELECTED
COMPANY ANALYSIS
Sector Overview
Market Size US$ 55 Billion (2019-2020)
Pharmaceutical Trade Exports: USD13.7 billion (Apr 2019-Jan 2020); Imports: USD1.99 billion (Apr
2019-Jan 2020)
Key export destinations U.S., U.K, Canada, Middle East
Global presence Manages 50 per cent of global demand for generic drugs
Supplies 80 per cent of drugs to fight AIDS
Market trends -Branded generics hold 70-80 per cent share of retail market;
-3rd largest market for APls in the world;
-4th largest medical device market in Asia:
-3000 pharma companies;
-10,500 manufacturing facilities

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Sanika S. Yadav
Current and potential impact on the pharmaceutical sector
Demand Side Impacts Supply Side Impact
• Spikes in sales over the short term as
the customers stockup on essential
medicines. Field force impacted.
Inventory in the supply chain should
cater to sales during lockdown.
Lockdown/ restrictions impact
• Sentiment not impacted. Anxious
about potential cures from
combination of available drugs
Consumer Sentiment
• Increase in exports as developed
countries stock up on essential
medicines, testing kits etc.
Exports
• Imported raw materials- API imports from
China have seen a 40-50 percent rise in
prices for specific cases.
•Price variation of key raw
materials
• Regional lockdowns have resulted in
production shutdowns due to non-
availability of labour
•Production shutdown
• Large organisations are able to manage
while others are impacted
•Cash flow constarints
• Supply disruptions due to raw material
storages, price increases, factory and freight
shutdowns- have impacted access to
medicines in certain cases
•Supply chain disruptions
• While pharma manufacturing has been
exempted from lockdown, non availability
of labour has resulted in production
shutdowns. Shipments from factories
affected.
•Labour force
• Factory closures and lmited raw material
inventory resulted in high impact
•Imports

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Sanika S. Yadav
Government Initiatives & Industry actions taken to tackle the
adverse impacts
Pradhan Mantri
Bhartiya Janaushadhi
Pariyojana (Rs. 6,400
Crores allocated)
Pharma Vision 2020
National Health Policy
(Rs. 34,115 Crores
allocated)
Ministry of Helth and
Family Welfare
(Rs. 65,012 Crores)
India has banned the export of
critical APIs, essential medicines,
specific medical devices, sanitisers,
surgical masks and ventilators – to
ensure sufficient quantities are
available for the domestic market
Most large global pharmaceutical
manufacturing are monitoring their
supply chains, and have reiterated
their commitment to continued
supply with minimum disruptions
Pharmaceutical companies are
working along with agencies to test
combinations of medicines for
potential cures against the virus
The USFDA has made certain
exceptions from import alert for
companies who manufacture critical
drugs
100% FDI in Greenfield Projects and 74% FDI in Brownfield Projects have been
allowed by the government.

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Sanika S. Yadav
Pharma Selected Company Analysis
Biocon reported a 10% rise
in total revenue to Rs 1,760
crore driven by overall
growth in generics,
biosimilar and research
services businesses.
Biocon said it has seen
steady progress towards
deploying Itolizumab, its
first-in-class anti-CD6
monoclonal antibody, to
treat Covid-19, globally.
“Our US-based partner,
Equillium, has received
positive feedback from
their pre-IND
(Investigational New Drug)
meeting with the USFDA
and is advancing along the
regulatory pathway in
preparation for initiating a
global Phase III,
randomized, double-blind,
placebo-controlled clinical
trial in Q4 CY20,” said the
company.
The revenue for the
quarter rose to Rs
4,896.7 crore from
Rs 4,800.9 crore, a
gain of 1.99 per
cent YoY.
October 28 said it
plans to complete
phase III clinical
trials of its Sputnik
COVID-19 vaccine
as early as March
and will seek
approval from the
Drug Controller
General of India
(DCGI).
Its consolidated net
profit (after JV share,
minority interest) for
the quarter ended
September 30 was
up by 4.6 per cent to
Rs 639.5 crore
against Rs 611.4
crore in the Q2 FY 19.
The Council of
Scientific and
Industrial Research
(CSIR) and Aurobindo
Pharma Limited have
announced a
collaboration to
develop vaccines to
protect against SARS-
CoV-2, also known as
COVID-19.

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Sanika S. Yadav
COVID-19 IMPACT ON
AUTOMOBILE SECTOR
& SELECTED COMPANY
ANALYSIS
Sector Overview
Sector contribution to GDP and
employment
• Automobiles - 7.1 per cent,
• Auto components - 2.3 percent
• ~40 million
Key export markets U.S., Mexico, Bangladesh, African region, and Asia.
Key source countries for imports China, Germany, South Korea, Japan and Thailand
Major auto clusters in India Chakan, Maharashtra; Oragadam, Tamil Nadu; National Capital
Region (NCR), Sanand, Gujarat.
FDI equity inflows (per cent of total) 5.2 per cent (Apr 2000 – Dec 2019)
Current and potential impact on the automobile sector
Supply Side Impacts
Demand Side Impacts

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Sanika S. Yadav
Supply Side Impact Demand Side Impact
 Consumers have been postponing their vehicle
purchase decisions owing to uncertainty
surrounding the pandemic.
• After market spending by consumers on
discretionary items will be put-off due to
increase in spending share of essential items
including food and medicines, for the immediate
period. Only essential repair related after market
services may continue, but under low demand
Consumer sentiment
 Global slowdown and production shutdown in
key markets affecting exports
Exports
 Short-term fluctuations witnessed in prices of
raw materials
Price variations of key raw materials
 Automotive sector was already facing weak
demand; production shutdown across the
country due to the pandemic will significantly
impact the sector further
Production shutdown
 General liquidity shortfall in the sector due to
Non-Banking Financial Companies (NBFCs) and
banking sector situation leading to an impact on
sales
Cash flow constraints
 Disruption in supply of raw material and other
critical components have affected imports
 Auto components sourcing might get dearer due
to disturbance in supply chain across the globe.
However, Indian auto component industry can
emerge in medium to long term as an
alternative source of supply if duly supported by
policy framework
Supply chain disruption
 China accounts for around 25 per cent of India's
automotive part imports
Imports- Dependency on China
 Availability of contract labour for operations and
support functions may be an issue even after
the situation normalises
Labour force

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Sanika S. Yadav
adverse impacts
National Mission for
Electric Mobility
NATRIP (National
Automotive Testing and
R&D Infrastructure
Project
Atomotive Mission Plan
2026
Auto original equipment manufacturers
(OEMs) will need to delay any new
launches by at least a few quarters, or till
sentiments improve
Additional income tax deduction of Rs.
1,50,000 on the interest paid on the loans
taken to purchase EVs
Tax on EV reduced from 12% to 5%

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Sanika S. Yadav
Automobile Selected Company Analysis
After reporting a loss for the
June quarter, Maruti Suzuki
to report a 11 per cent YoY
rise in profit at Rs 1,510
crorefor September quarter,
thanks to healthy demand
for entry-level cars.
Suzuki joined hands with the
government to support the
front line workers and has
started supplying PPE kits
and using its production
place to produce masks
In order to cater more sales
Suzuki partnered with
various banks to provide
attractive offers to
consumers to boost sale.
To further extend care
towards existing customers
company extended its
warranty and free servive.
Bajaj posted an 18.84 per
cent year-on-year (YoY) drop
in net profit at Rs 1,138.20
crore for the quarter ended
September 30.
Domestic two-wheelers
registered a strong
turnaround in the first half
of the quarter driven by
pent up demand. While the
exact festive spike is
awaited, early signs show
(strong) indications of a
recovery. Industry grew by 7
per cent in Q2 and our
growth was in line with
industry and hence our
market share was 18.2 per
cent in the first half of FY21
against 18.1 per cent in
H1FY20,” Bajaj Auto said in a
release.
Mahindra and
Mahindra Financial on
Monday reported 34% rise
in consolidated
net profit at ₹353 crore for
September quarter 2020
Tractors, passenger cars and
Light Commercial Vehicles
(LCVs) are seeing healthy
demand, the lender said.
Pre-owned vehicles
continued to be a growth
driver and it expects to see
an increase in digitally
enabled lending and
collections in rural and semi-
urban markets.
"The rural market has
remained sufficiently
insulated from the COVID-19
pandemic and is recovering
from its impact. Almost all
the Company’s branches are
up and running, except in
the major metros.

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Sanika S. Yadav
COVID-19 IMPACT ON IT
SECTOR & SELECTED
COMPANY ANALYSIS
Sector Overview
Sector contribution to GDP • IT contributes- 7.7 per cent, and is expected to contribute 10
per cent to India’s GDP by 2025.
Market Size • Export - US$ 147 Billion (2019-2020)
• Domestic – US$ 44 Billion
Employment generation • The sector has also generated 4 million jobs and provided
indirect employment to 10 million. TCS, the biggest IT services
company in India, alone has generated over 4 lakh jobs, while
Infosys has over 2 lakh employees.
Revenue Revenue was estimated at around US$ 191 billion in FY20
It will grow to US$ 350 billion by 2025.
FDI equity inflows (per cent of total) India attracted cumulative Foreign Direct Investment (FDI) inflow worth
US$ 44.91 billion between April 2000 and March 2020.
Current and potential impact on the IT sector

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Sanika S. Yadav
Supply Side Impact Demand Side Impact
adverse impacts
Computer software and hardware sector in
India attracted cumulative Foreign Direct
Investment(FDI) inflow worth US$ 44.91 billion
between April 2000 and March 2020. The sector
ranked second in FDI inflow as per the data
released by Department for Promotion of
Industry and Internal Trade (DPIIT).
PE (Private Equity) investmentin the sector
stood at US$ 11.8 billion across 493 deals in
2019. Venture Capital (VC) investment in the IT &
BPM sector stood at US$ 67.0 million during
Q3FY19.
The Government of India has extended tax
holidays to the IT sector for Software Technology
Parks of India (STPI) and Special Economic Zones
(SEZs).As of February 2020, there were 421
approved SEZs across the country, with276 of
them from IT & BPM
Further, the country is providing procedural ease
and single window clearance for setting up
facilities.On May 2019, the Ministry of
Electronicsand Information Technology(MeitY)
launched the MeitY Startup Hub (MSH) portal.
The Government has identifiedIT as one of the 12 champion service sectors for which an action plan
is being developed.It is setting up a Rs 5,000 crore (US$ 745.82 million)fund for realising the
potential of these champion service sectors.
Software
Technology Parks of
India
Phased
Manufacturing
Programme
Make in India
Consumers have been postponing their purchase decisions
owing to uncertainty surrounding the pandemic.
•75% of the respondents expect clients’ business de-growth
in FY20-21, with 40% of these respondents expecting a De-
growth of 5% or more
Client sentiment
•As a result, deals are being restructured to manage
immediatepriorities with a focus on relooking at terms
related to fixed-costs, payment-term flexibility, resource
reallocation
•Restructuring of services
•Major revenue of IT sector comes from exports and post
COVID-19 every economy is growing at a very slow rate and
this will affect the sectr for a long period.
Reduced exports
•New opportunities are emergingas clients start to revisit
their digital transformation journey with high-speed secure
infrastructureand multi/hybridcloud leading as the
emergingtech spend areas. Data, ArtificialIntelligence, IoT
and Cyber Security remain the key tech themes.
Blessing in disguise
To secure data of clients companies are investing in
cloud computing and trying to make it secure and
efficient
Investing in Cloud
Companies planning to continue work from home
culture to retain low cost and earn higher profits
Cash flow constraints-Changesin working
environment
Around 2000 job opportunities were created in the
secound quartes itself
Rising employment opportunities

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Sanika S. Yadav
IT Selected Company Analysis
IT services firm Mindtree on
Thursday reported a net
profit of Rs 253.7 crore for
the quarter ended
September, a rise of 87.9 per
cent from a year ago.
Our approach of redefining
possibilities in the new
normal for businesses
enabled us to deliver a
balanced H1 performance.
This has helped to reinforce
confidence on our strategy
to build on existing strengths
and drive profitable growth
by being the business
transformation partner for
our clients, developing
future ready talent and
delivering value to all our
stakeholders,” he added.
TCS reported second quarter
profits growth of 4.9 per
cent to Rs 8433 crore, and
revenue by 3 per cent to Rs
40,135 crore.
TCS said its board has
approved a share buyback
proposal amounting up to Rs
16,000 crore.
Driving accelerated business
value realization of our
customers' digital
investments has resulted in
broad-based revenue
growth. The strong order
book, a very robust deal
pipeline, and continued
market share gains give us
confidence for the future,"
The Larsen & Toubro-owned
firm had reported a net profit
of Rs 135 crore in the
September Quarter
The company has declared a
special dividend of Rs 18 per
equity share to mark the
successful completion of the
divestment.
The company bagged orders
worth Rs 28,039 crore at the
group level during the quarter
ended September 30, 2020,
registering a sequential
improvement of 19 per cent
over previous quarter, but a
decline of 42 per cent vis-à-vis
previous year, on account of
deferment of award decisions
largely caused by the
pandemic. International orders
during the quarter constituted
36 per cent of the total order
inflow.

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Sanika S. Yadav
CONCLUSION
The only V-shaped recovery after coronavirus
will be in the stock markets
-Larry Elliot
 Earnings for the June quarter, which analysts had dismissed as a washout quarter,
panned out better for many companies compared with muted expectations, and
management commentaries suggested the pace of recovery may have been varying from
industry to industry.
 Some industries hit the revival in the September quarter itself, while others anticipate a
slower recovery which they say may take up to 18 months.
 The rapid bounce in stock markets helps to give the impression that everything is under
control and the economic crisis is drawing to a close. Traditional wisdom has it that share
prices anticipate events so rising stock markets reflect the fact that the world is on course
for a rapid recovery that will see life return to normal in 2021.
 This might be true for the high net-wealth individuals invested in hedge funds. The
reason for that is simple. Financial markets were once seen primarily as places where
businesses and governments could raise capital for productive investment. For almost
everybody else, it is a different story.
 The gulf between what is happening in the real world and what is happening in the
financial markets has never been wider.

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Sanika S. Yadav
REFERENCES
http://www.businessworld.in/article/Impact-Of-COVID-19-On-The-Indian-Stock-Markets/11-05-2020-191755/
https://www1.nseindia.com/products/content/equities/indices/historical_index_data.htm
https://www.bseindia.com/Indices/IndexArchiveData.html
https://www.niftyindices.com/Factsheet/ind_nifty_auto.pdf
https://home.kpmg/content/dam/kpmg/in/pdf/2020/04/potential-impact-of-covid-19-on-the-indian-economy.pdf
https://www.moneycontrol.com/india/stockpricequote/pharmaceuticals/drreddyslaboratories/DRL
https://www.niftyindices.com/Factsheet/ind_nifty_pharma.pdf
https://www.ibef.org/industry/pharmaceutical-india/infographic
Read more at:
https://economictimes.indiatimes.com/markets/stocks/earnings/biocon-q2-results-net-profit-drops-22-on-higher-rd-cost-
revenue-jumps-10/articleshow/78821538.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
Read more at:
https://economictimes.indiatimes.com/markets/stocks/earnings/aurobindo-pharma-q2-profit-rises-5-to-rs-640-
crore/articleshow/72026107.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
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https://economictimes.indiatimes.com/markets/stocks/earnings/maruti-suzuki-q2-earnings-preview-firm-may-deliver-double-
digit-profit-growth-solid-margin-in-
q2/articleshow/78923678.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
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https://economictimes.indiatimes.com/markets/stocks/earnings/bajaj-auto-q2-results-profit-drops-19-yoy-to-rs-1138-crore-
misses-street-
estimates/articleshow/78805075.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
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https://economictimes.indiatimes.com/markets/stocks/earnings/bajaj-auto-q2-results-profit-drops-19-yoy-to-rs-1138-crore-
misses-street-estimates/articleshow/78805075.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
https://www.livemint.com/companies/news/mahindra-finance-q2-consolidated-net-profit-rises-34-to-rs-353-crore-
11603716458233.html
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https://economictimes.indiatimes.com/markets/stocks/earnings/mindtree-q2-results-net-profit-jumps-88-yoy-to-rs-254-
Read more at:
Read more at:

Covid impact on selected sectors of indian stock market sanika yadav

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