Sid Talks Stocks

-Siddhant Taware

Amid growing concerns regarding the second wave of covid throughout the country and states announcing lockdowns in certain areas, there's panic among the Indian as well as foreign investors in the Indian markets. Nifty 50 touched an all-time high of 15314 on Feb 12 and since then corrected to 14406 as of 22nd April as India is struggling to cope with the soaring numbers - it recorded some 314,835 new coronavirus cases in the past 24 hours, while deaths rose by 2,104.

Where are the opportunities to invest during this correction? Let's see.

Let's think from a consumer point of view to get a better understanding of the opportunities in the market. Pharma sector is considered to be a defensive sector as it tends to perform better during uncertain times. Well given the current uncertainty regarding covid pharma and pharma-related stocks could turn out to be a good bet for the short as well as long term.

The first stock which is going to benefit from this is Dr. Reddy's lab. It supplies vital drugs like remdesevir and favipiravir which are used to reduce the symptoms of covid among patients.

In the current scenario, there’s a shortage of this drug, and Dr. Reddys aims at taking advantage of this situation and speed up its production so that it could meet the growing demands. Not only that but Dr. Reddys is also going to start distributing the Russian Sputnik V vaccine as early as 1st week of June. With vaccine shortage across the country and Sputnik V having a better efficacy rate of 91.6% compared to the other two vaccines could prove beneficial for them. Dr. Reddy's Lab is a hit among investors as it has given a return of around 138% in the course of the past 3 years. Currently, Dr. Reddy's lab is trading around 5200. If someone has a trading/investment horizon of 3-6 months Dr. Reddys lab is one of the best bets one could have given the circumstances.

One could buy this stock with a target of around 5300-5350. It could also possibly touch 5500 which is around its 52- week high.

The next stock which could prove a good bet not only for 3-6 months but also in the long run I believe is ICICI Prudential Life Insurance. Coming to the insurance sector in India there’s a lot of scope.

According to statista.com stats In India only around 35% of the population is insured whereas countries like the U.S have 57% of their population insured by life insurance. Private players like ICICI Prudential provide a better payout, better service than the public companies like LIC, New India Assurance, etc. Its P/E ratio of 73.65 is also below the industry average of 81.40 indicating the stock might be trading at a cheaper valuation. Over the past 3 years, it has provided investors with around 32% returns. With covid bringing a lot of uncertainty about what lies in the future and growing awareness regarding health among Indians Insurance Sector looks to be a good bet for the short as well as long terms with a target of 530 in the short term and anywhere above 650-700+ in the long term.

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