Covid 2.0 - Investment Ideas For April: Axis Securities  

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Axis Securities Report

The second wave of Covid-19 has proven to be a terrible adversary with a significant rise in cases overwhelming the medical infrastructure of the country.

Shortage of hospital beds, oxygen, Remedesivir, and other challenges now dominate the social media discussions.

The market, too, is witnessing a significant correction in the wake of rising cases and re-imposed lockdown-like measures and strict restrictions across states.

While there are challenges, the government has proactively started undertaking measures to open up the immunisation program to cover a broader age group from 18 to 45 year old from May 1, 2021.

Basing the sensitivity analysis of the virus spread and the duration of lockdown, we estimate FY22 earnings for NIFTY 50 to decline by 6% to 16% in the base to the bearish case scenario. This means FY22 earnings are likely to be in a band of 575 to 650 which still implies growth on FY21 levels. While this is not a doomsday scenario, it does indicate that a few sectors will underperform in the near to medium term while the other few will outperform.

Accounting for all these factors, we cut our December 2021 NIFTY 50 target by 6% to 16,100.

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