The Panorama newsletter is sent to Moneycontrol Pro subscribers on market days. It offers easy access to stories published on Moneycontrol Pro and gives a little extra by setting out a context or an event or trend that investors should keep track of.
The pandemic continues to rage unabated. On Monday, India reported fresh COVID-19 infections of 368,000 and 3,417 deaths. Citizens in many parts of the country are gasping for oxygen amid a shortage of beds and medicines. The situation is dire enough for an industry lobby to advocate a lockdown.
Confederation of Indian Industry (CII) President Uday Kotak has called for curtailing economic activity to contain the second wave. “Given the current pandemic situation, safeguarding lives is of utmost priority and nationwide maximal response measure at the highest level is called for to cut the transmission links,” said Kotak.
This was something that Anthony Fauci, chief medical advisor to the United States Administration, had said over the weekend in an interview. “Shut down the country for a few weeks,” he told The Indian Express. The newspaper also reported that the Centre's COVID-19 task force - which includes experts from AIIMS and ICMR -- is pushing hard for a national lockdown.
While India has many state-wide and localised lockdowns, the stringency of its lockdown as measured by the Oxford Coronavirus Government Response Tracker is lower than that of several countries in Europe. You can read more here.
A more stringent lockdown could well help save lives, but it shouldn’t be wasted like the last time around. As Kotak put it himself, “Highest response measures are needed to break the chain of contagion and also use the time to rapidly build up capacity.”
Still, with the Prime Minister saying a few days ago that lockdowns should be the last option for states, what are the chances of a nationwide lockdown?
Not much, according to Prashant Jain, Executive Director and Chief Investment Officer of HDFC Asset Management Company.
“I personally feel that the impact of the current crisis on the economy will be less compared to its social impact,” Jain said in an interview.
His reasoning goes something like this: The Indian economy is structured in a manner where a large number of the low- and middle-income households make a living because of spending by the top 10-20 per cent of households, especially on services. But because this low and middle income segment has a low share of purchasing power, especially in discretionary goods and services, the second wave disruption won’t be much of an economic issue.”
You can read the full interview, exclusive for Pro subscribers, here.
The April data released so far lend credence to Jain’s optimism. Overall manufacturing activity in the Indian private sector expanded at a robust pace in April with the manufacturing purchasing managers’ index little changed from the previous month.
Export sales are helping with the economic recovery quickening in the West owing to rapid vaccination and stimulus cheques. You can read our PMI analysis here.
Moreover, preliminary trade data released on Sunday showed non-petroleum exports and non-oil non-gold imports rising by 19.4 percent and 6.5 percent, respectively, compared to April 2019. (Using 2019 numbers gives a better sense since the country was completely shut down in April 2020).
While that is promising, near-term demand concerns as well as rising inflation still persist. Ultimately, the progress of vaccination will be the key determinant of the economic recovery in this financial year.
The news there is not heartening. In an interview with the Financial Times, Serum Institute of India (SII) CEO Adar Poonawalla said the capacity increase to 100 million doses monthly from around 60-70 million now will happen only by July. What’s worse, the Centre has not yet placed fresh orders (after March) with Serum Institute and Bharat Biotech, the Business Standard reported citing multiple unnamed sources.
On top of this, the Supreme Court has waded in and asked the Centre why it “can’t acquire 100 per cent (the vaccines), identify the manufacturers and negotiate with them and then distribute to the states?”
Will the court’s jab improve the Centre’s COVID consciousness? We try to answer here.
Stay safe and check out these reports from our independent equity research team:
Which AMC stock to bet on at a time domestic flows are set to improve in FY22?
Yes Bank Q4: Why saying yes may be premature
Indian Hotels: Look beyond near-term hiccups
IndusInd Bank – a candidate to ride the post COVID recovery
Laurus Labs: Diversification to speed up in FY23; add on declines
Ambuja Cements: High conviction long-term buy
Food for thought for Marico investors
ABB India: Business recovery could take a pause led by second wave of virus
What else are we reading?
Why Amartya Sen’s thesis of democracy averting famines doesn’t apply to the fight against the pandemic
What explains Trinamool’s spectacular victory?
Commodities supercycle arrives as pandemic recedes globally (Republished from the FT)
Our chartists’ technical calls for the day (Please note these calls are published before the markets open on trading days): RBL Bank, Aurobindo Pharma and L&T Finance Holding
Thank you for subscribing to Moneycontrol Pro. We would love to hear from you. For any feedback on the product and suggestions please click here. We promise to read your responses although we might not be able to reply to each one individually.