Moneycontrol Pro Panorama | Economy puts on display courage despite the odds

there are the optimists in markets who choose to believe in the long-term narrative of economic recovery hereon. (Representative image)

Dear Reader,

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.

In today’s edition, our Chart of the Day raises a critical question: Is rural distress rising? The numbers for work demanded under the rural employment guarantee programme (MGNREGA), one of the indicators that can be used to gauge rural distress, is higher in May 2022 than it was in May 2021 and even May 2019. Data show slowing consumption in rural and semi-urban areas, as seen in sales of two-wheelers and cars, white goods and even essential goods.

Worsening rural distress is yet another addition to the rising number of red flags in the domestic economy.

Already, inflation concerns have been pervasive. March quarter results reflect them, with management commentary being cautious on margins for a couple of quarters more. Clearly, double-digit expansion in earnings of Nifty companies was driven by three broad segments -- commodities, banking, financial services and insurance (BFSI), and information & technology (IT). While core manufacturing was hit by margin pressure from commodity cost inflation, services took a beating from wage inflation.

Latest gross domestic product (GDP) numbers also portrayed a slowdown in consumption, which is usually the mainstay of India's economic growth. Fortunately, this was offset by government capital expenditure. But uncertainty remains on how high inflation, along with rising interest rates, would impact consumer sentiment.

Then, there are red flag sightings in the euphoric world of start-ups. Economic uncertainties around geopolitics, inflation and interest rate hikes make for an uphill ride for these fledgling companies. The funding tap that was flowing with full force is slowly drying up. In our Start-up Street section, read investor and start-up advisor Chandu Nair’s piece Default Alive: Navigating through troubled times.

Be that as it may, there are the optimists in markets who choose to believe in the long-term narrative of economic recovery hereon, riding on hope that the worst is behind us.

Indeed, companies are coping, playbooks are being revisited and at times, investors are getting active in driving governance in companies. Read my colleague Ravi Ananthanarayanan’s piece on what activist investor Nelson Peltz’s joining the Unilever board means for the company and its stakeholders.

Investing insights from our research team

Why look at RateGain Travel Technologies now?

Why Prudent Corporate is worth a look in uncertain times

Restaurant Brands Asia: Set to emerge stronger, post COVID-19

Bharat Electronics: Growth to resume this year, with constraints easing
What else are we reading?

The root of the misuse of Aadhaar details

Monsoon Watch 2022 | IMD forecasts above-normal rainfall in rain-fed regions

FX Learn | How to use options to trade in foreign currency pairs

Crypto Conversations | Blockchain & Space: Mapping the synergy of most exciting technologies

Meta: Sheryl Sandberg exits the metaverse (republished from the FT)

UPSC Results | Dear officers, you have a valuable role in economy as well, writes Subhash Chandra Garg

Technical Picks: Copper, USD-INR, Asian Paints, KPIT Tech, Bharat Electronics and SKF (These are published every trading day before markets open and can be read on the app)

Vatsala KamatMoneycontrol Pro​