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Moneycontrol Pro Panorama | India’s growth engine is feeling the heat

In today’s edition of Moneycontrol Pro Panorama: the way out of NPA trouble, an economic blueprint to tackle second wave, steel sector outlook, the road ahead for Maruti, revisiting bond investing and much more

May 04, 2021 / 03:52 PM IST

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.

Yesterday’s Economic Recovery Tracker update had pointed out how high frequency indicators were already showing strains from the pandemic-linked restrictions. Power consumption has dipped and consumer sentiment has taken a beating and so has mobility. Nomura’s latest reading of the India Business Resumption Indicator came in at 75.9 and registered its sharpest weekly fall in over a year. And, this is when the lockdown measures are neither as stringent as before nor applied across the country.

While the adverse economic effect is still visible, it is expected to be transitory. Nomura expects parts of the economy such as manufacturing, agriculture and business-to-business services (that is not consumer services) to remain relatively unaffected. Thus, it expects the adverse effects to be limited to the June quarter.

Another foreign broker’s research report talks about the second wave for Maharashtra peaking in May, while the country may see it peak by mid-June 2021. It is basing this on the current pace of additions in Maharashtra and how the trend is in the rest of India. The outlook for the end of the third wave appears to be giving some confidence to investors also, as recent days have marked an uptick in the broad market as well. At 12.55pm, the Sensex was up by 1.5 percent.

Close

Everyone appears unanimous in their views that vaccination is what will provide protection to India and its economy from the third wave. If countries in Europe have been attacked by multiple waves, there’s no reason for India to have a different experience. While we may (hopefully) not let our guard down after the second wave subsides, it has become difficult to predict how each wave will turn out in terms of its severity or spread. Vaccination is the best defence against any nasty surprises as of now.

Today, at 4pm, the government will open up registrations for those 18 and above to get vaccinated, either through private facilities or through state government facilities. While registrations can happen, the main question on people’s minds is what will be next, in terms of getting an appointment and then the vaccination itself. The existing age groups eligible for vaccination are already facing hardships on this front in cities such as Mumbai.

They will also get clarity on whether state governments will charge and how much, and what will the rate be at private facilities. Meanwhile, the Maharashtra government has already informed that it won’t be able to start vaccination before May 20 because of lack of vaccines, while the Chhattisgarh government has said July. They claim to have been told by Serum Institute of India that they won’t be able to supply before that.

What does this mean? After all, the central government had said that in the third phase, half of the monthly output will be reserved for the state governments and private players. Was this to be allotted on a first come first served basis and some state governments were quicker to the draw? Or have private hospitals beaten state governments to the queue. Hopefully, some answers will become available today, if along with registrations, vaccine availability also becomes known. The third phase of vaccination is set to be a chaotic one and may face delays. In turn, that could leave investors vulnerable to the risks of a next wave hitting before we are adequately protected. Meanwhile, we need an economic plan to counter the COVID-19 second wave catastrophe.

Investing insights from our research team:

Axis Bank: Relatively better placed to face the COVID second wave?

Maruti: Raw material and COVID pose challenges, valuation reasonable

Britannia: Multiple medium-term tailwinds for long-term investors

Bajaj Finance Q4 show stable, progress on digital plans will drive the stock

TVS Motor: A high-octane drive, trades at fair value

In our Opinion section today, we wrote on:

How to overhaul asset reconstruction companies? RBI paper has some answers

There’s only one risk to the bright outlook for steel

Tech Mahindra bucked IT sector hiring trends in FY21

Turkey’s cryptocurrency crisis may have a silver lining

Bond investing needs a complete rethink (republished from the FT)

Technical picks: Ambuja CementsTata MotorsICICI Bank and L&T (These are published every trading day before markets open and can be read on the app)

Thank you for subscribing to Moneycontrol Pro. We would love to hear from you. For any feedback on the product and suggestions please use the chat box on this page. We promise to read your responses although we might not be able to reply to each one individually.

Ravi Ananthanarayanan

Moneycontrol Pro
Ravi Ananthanarayanan

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