Post covid market opportunities| North Loop Official Blog
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North Loop
18 Nov 2020

Post covid market opportunities

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COVID-19 has had a disastrous impact on nearly everything around the globe- on people’s health, jobs, businesses, and the economy at large. Many argue that the damage done by the pandemic is irreversible and that things would not return to its former glory, implying that the current scenario would be the new normal.
The pandemic has primarily taken a significant toll on liquidity and scale of operations, due to which the MSME and startup ecosystems have come to an absolute standstill.
Investors who have invested in the stock market have also faced the wrath of the pandemic with constant losses and market crashes.

However, the outbreak has arguably changed the world for the foreseeable future- shifting retail trends, for example, from offline to online. People have also become increasingly conscious of their health and habits.
But one of the revolutionary changes brought about by COVID-19 is the whole work-from-home scenario, which before the pandemic was unheard of in most cases. Various companies have introduced digital applications and peripherals just to facilitate the work-from-home culture, and returning to the place of work may be a thing of the past for many companies.

So, that leads us to the next question- what are the post covid market opportunities in store for people?

Given below is a list of sectors that are likely to flourish post the COVID-19 pandemic-

1. Ecommerce, Digital Tools and related sectors-

When the restrictions imposed as a result of the global lockdown were lifted by the Indian Government and e-commerce businesses were given the green light to recommence operations, business started booming for these companies. People could not freely move out of their homes, resulting in a shift from offline purchasing trends to online purchasing trends.
E-commerce has since been thriving, and companies like Amazon have fared extremely well during the lockdown. As a result, the shares of E-commerce companies have seen steady growth, and many stock market gurus recommend E-commerce based stocks for long term prospects. Even delivery based services are making the grade nowadays.

Another sector that has been flourishing is the Digital tools and applications sector under which companies like Zoom Video Communications Inc. and Slack Technologies, Inc. operate. Zoom, Slack, Asana, and Clockify have played a pivotal role in running the whole work-from-home show, and any investments made in this space will be undoubtedly profitable.

2. Medical and Healthcare sector-

The pandemic has no doubt affected people’s health, and this impact has led to countless number of people turning to the medical sector based companies. The demand for products such as medicines and medical instruments and peripherals such as oximeters, Personal Protective Equipment (PPE) kits, and masks are increasing by the day. These companies also cater to the rising demand for essential supplies such as hand sanitizers, handwash, and disinfectant cleaners. The Healthcare sector is also booming as people are becoming increasingly conscious of their health, habits, hygiene, and lifestyle, and this again is a lucrative prospect for many. The ever-growing demand conveys the impression of the bright future that lies ahead for these companies, and there is no better time to take advantage of the prospects of this sector.

3. Banking, NBFCs, and other financial services sector-

The lockdown has led to a lot of people losing their jobs, and the ones who have not been laid off would have gone through a temporary furlough/pay-cut period, leading to a lot of illiquidity and very little cashflows. Banks and NBFCs play a role of paramount significance to people during times like these, providing loans and other financial services to people in need. However, only some would be able to get secured loans from Banks and NBFCs upon provision of security and the rest would have to turn to other financial institutions that provide loans at a much higher rate without the requirement of collateral.
The financial services sector is an essential part of everyone’s life, proving to be a prospective sector for investments.

4. FMCG Sector-

One of the most prosperous sectors during the lockdown, the FMCG sector has broken several milestones due to the increase in the consumption growth trends. Retail and FMCG chains have benefited from the ‘panic buying trends’ of consumers- due to the fear of shortage/exhaustion of essentials as a result of the lockdown. This space has also been eventful for many FMCG companies manufacturing ‘healthy and immunity-boosting food’, capitalizing on the health consciousness of people as a result of the pandemic. The lockdown restrictions levied on hotels and restaurants are making ready-to-eat food items increasingly popular among the masses. Companies are also continuously trying to expand their range of products to meet the soaring demand of end-users.
This makes the FMCG sector a popular option for many investors.

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Despite the negative effects of COVID-19 on the market, stocks and mutual funds are still a popular option across the aforementioned sectors. However, diversification of portfolio holds a very key part in fetching good returns, ideally in 60% equity and 40% debt. Investments need to be made in companies with good financials and the ones that appear bullish in the current market scenario, to generate good returns over the long run.
Another investment option would be Gold, which is not linked to the market. Gold is relatively inflation-proof and has high liquidity, making it a popular option during a market downturn. However, the returns offered by gold may be very low, and the number of instruments linked to gold is very few too.

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This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended be advice. You must obtain professional advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax, investment or other professional advice from North Loop or its affiliates. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date. All opinions expressed do not reflect the views of North Loop nor are endorsed by North Loop.