Hot 'Corona Connected' Stocks

As the COVID-19 pandemic continues to unleash havoc the world over, the impact is the same on the stock market, with both Nifty and Sensex trading down. But here are the top five 'COVID-19 connected' stocks that make for perfect bets. Prem Doshi of Ace Equities analyses exclusively for GoNews.

5 Ideas To Bet On In The Coronavirus Theme

Coronavirus, of late, has wreaked an havoc on global stocks.

Nifty and Sensex trade down by almost 25-30% from highs, despite a sharp recovery rally of almost 25% from lows.

Testing, sanitizers, masks and more have become a part of the Lockdown Life.

As investors and traders wonder which stock to eye, here are five ideas that make perfect bets for Coronavirus Theme.

01 – Syngene International – CMP 315 - Testing

Coronavirus is here to stay, learn to live with it, says the Government.

If the pandemic has to remain as we open the lockdown, testing is going to be of prime importance.

So our first stock with a focus on testing is - Syngene International Ltd.

Syngene International is owned by Biocon and it's a research organization, Syngene is into pharma & biotech research as well as clinical trials via a subsidiary called Clinigene.

As India focuses on indigenous testing kits, Syngene Mylab & Serum Institute of India are in a partnership for mass production of PCR based testing kits, now SYNGENE has also developed a faster ELISA based testing kit which is seeking approval from ICMR.

On valuations, the stock is looking decently priced given it is an important company right now in the fight against Coronavirus.

Technically, the stock trading above all its crucial moving averages of 30 days, 50 days, 200 days.

Short-term traders and investors can enter Syngene with a stop loss around 280 and a target of at least 50-60% rally from current levels.

We believe once the company gets approval for the ELISA Test the stock can have some sharp run-up.

02 – 3M India – CMP 18620 – Sanitizer & Masks

3M India Ltd is the flagship listed company of 3M Company USA in India. 3M Company USA holds 75% equity stake in the company and is a diversified technology and science company with a global presence in Industrial; Health Care; Consumer; Safety and Graphics; and Energy businesses and is among the leading manufacturers of products for many of the markets it serves. Most of its products involve expertise in technology product development manufacturing and marketing and are subject to competition from products manufactured and sold by other technologically oriented companies.

Sanitizers brand Handrub and a lot of medical goods are manufactured by 3M India including PPE Kits, surgical and other equipment.

However, segmental revenue analysis shows while 14.2% of it comes from healthcare and 23.6% of it comes from protective equipment the remaining 62.20% come from Industrial Goods, Electronics which cater to various industries including auto sector.

On valuations, the stock is on the expensive side but that is normal for other MNC companies too.

Technically, the stock is looking weak and below important moving averages.

However, with a STOP LOSS around 18000, short-term traders can play for a sharp bounce back in this stock by 15-20% from CMP.

03 – Natco Pharma – CMP 614.60 – Remdesivir Hopes

The new drug by Gilead – Remdesivir which is approved by the US FDA for treatment of Coronavirus has no manufacturers in India as of now.

While many of the companies like Cipla, Dr-Reddy, Cadila are said to be in the fray, Natco Pharma too should be in focus.

Another Gilead injectable antiviral drug called sofosbuvir which is indicated for hepatitis C is formulated and sold in India by Natco Pharma, Remdesivir too is an injectable and since Natco has worked with Gilead for sofosbuvir, It should be eyed.

On valuations front, the stock is not over-priced.

Technically, the stock is looking bullish.

The stock is trading above all its key moving averages, It also has a powerful trendline breakout above 650.

With a stoploss below 580, Short-term traders should eye a new all time high above 740 soon on this stock.

04 – Bharti Airtel – CMP 530 – Work From Home & Data Consumption

While Reliance Jio has dominated the last few years in the Internet space, Bharti Airtel has so far managed to withstand the Jio wave.

Bharti Airtel has 28.4% market share in mobile telecom and 21.2% market share in broadband space.

Off-late we have seen households getting rid of their broadband connections and using with their mobile phone for their data needs, As we head to a work from home culture or even to watch OTT content on the TV, Broadband connections are going to be back.

Airtel has been facing headwinds by way of pending AGR dues which run in big figures but it has support from a lot of Foreign Investors and Singtel which owns a major chunk in Bharti AIrtel is owned by Singapore Government Investment Arm.

Technically, the stock is in a bullish formation.

With a stop-loss of around 490, traders can bet on this internet stock with the possibility of a fresh all-time high soon towards 600-650.

05 – Hospital Stocks

Coronavirus pandemic has exposed that India and the globe needs a lot of healthcare sector expenditure.

We need to focus on building a lot more hospitals, government colleges either fully private or public or via Public Private Partnerships.

While Coronavirus has wiped out Outdoor Patient Department incomes for hospital chains, We feel on declines this sector is going to witness big-ticket investments. Among hospital stocks we like these two:-

1- Apollo Hospitals at CMP and on declines.

2- Narayana Hrudayalaya at cmp and on declines.