Worst over for economic recovery-related stocks

 Govt actions to contain the spread of Omicron has hit the contact-intensive sectors again. On the bourses, the related shares fell sharply in one month. Find out why investors are still optimistic

Just when the world thought it was slowly, but steadily, returning to the ‘old-normal’, the new variant of coronavirus showed us the pandemic wasn’t over. Not just yet. Omicron, labeled as a ‘Variant of Concern’ by the World Health Organisation, was first detected in South Africa in late November.
On Wednesday, state governments stepped up their guards with fresh curbs on religious and social gatherings, a day after the Centre asked states to activate war rooms to tackle the rising Omicron threat.

They also limited capacity in restaurants and bars and ordered vigil on the ground
And since then, governments across the globe have put up guards to stem its spread. Travel restrictions, limited seating capacities, and ban of unvaccinated citizens from visiting public places – governments have been quick in their bid to contain the spread.
And these fears have yet again hit the contact-intensive sectors, which are still recovering from the wounds of the pandemic waves. The sentiment resonated on the bourses, too, where shares of companies involved in hospitality, travel, and entertainment have fallen like nine pins in one month.
Barring Lemon Tree Hotels, which managed to rise 11% during the past month, all the key recovery-related players from the BSE500 space tanked on the bourses. The shares of SpiceJet were the worst hit as they declined nearly 24%, others including IndiGo, Mahindra Holiday, and PVR dropped between eight and 18%. In comparison, the BSE Sensex was down less than 3%.
However, with the severity of the virus still unknown, the near-term outlook for these sectors remains in limbo. Analysts, on their part, too, remain watchful of the evolving situation even though they remain optimistic on these players from a long-term perspective. For instance, Gaurav Dua, who is Head - Capital Market Strategy at Sharekhan by BNP Paribas, believes the worst may be behind recovery-related players.