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.
A new week begins and investors continue to drive equities up with the Sensex up by 0.8 percent at 12.38pm, and up by 6.4 percent since mid-May. A downward trend in daily new infections is giving hopes that an end to the local restrictions in several states is around the corner. Today’s data release shows new cases at 1.52 lakh compared to 4.1 lakh on May 4.
States such as Delhi and Maharashtra have already announced relaxations to the existing restrictions. Maharashtra has said that it will allow districts with positive rates below a threshold to allow shops that could remain open till 11am to now stay open till 2pm. Standalone shops selling non-essential items too can open during these hours but not over the weekend. E-commerce deliveries of non-essential items are being allowed. A progressive relaxation of these restrictions in Maharashtra and other states will see economic activity pick up. But it will be a gradual process, depending on the local situation.
While investors will prefer to look at what lies ahead, it’s also important to look back to see where we have come from, as the learnings can be useful in the quarters and years ahead. Today, the government will report Q4 GDP data that will give a picture of how the economy fared, when not tied down by lockdowns.
That’s the main point of today’s curtain-raiser on the GDP numbers, pointing to what investors and observers of the Indian economy should watch out for in the data. Data points relating to private consumption, government consumption and spending on capex are crucial points to watch for, among others. The earlier headline GDP growth number was estimated at -1.1 percent but it is now expected to fall in the 1.5 to 2 percent range. If it exceeds this, it will be a positive surprise for the market.
One of the critical points supporting investor optimism is the outlook for corporate earnings. What is keeping earnings growth going at a steady clip, despite the pandemic knocking economic growth to the ground? We analysed results of BSE500 companies that are available till now, excluding banks and financial services, and found some clues on why they did so well. The headline numbers show that in FY21, sales fell by 5.5 percent but profits rose by a fantastic 57 percent.
What gives? Do read this piece to find out how corporate India rose to the challenge posed by the pandemic, focusing on what’s important, becoming more efficient by cutting not just non-essential costs but also simplifying their product offerings. That mindset carried on to the balance-sheet side as well, conserving cash and paying off debt and keeping working capital needs in check. Can this continue? What are the risks? Read to know more.
If companies were in good shape, then those that finance them—banks—too did well. We found that the corporate non-performing asset cycle has changed for the better. But the next challenge may come from the retail and the MSME side and from the services sector. But there are some mitigating factors as well. Do read to know more about what earnings say about the outlook for banks.
Investing insights from our independent equity research team
M&M puts up a strong show, valuation reasonable
Sun Pharma: Traction in speciality likely to sustain
Why should investors consider City Union bank despite sharp fall in asset quality in FY21?
Aditya Birla Fashion and Retail: Near-term weakness could present opportunity for long-term investors
Technical picks: ITC, IDFC First Bank, SBI Life and Bank of Baroda (these are published every trading day before markets open and can be read on the app)
What else are we reading today?
COVID care — GST panel needs to move more quickly
Interview | Second wave might bring temporary pause in activity, but will not derail growth trajectory: Kejriwal of KEC
Are you working in a fractured organisation? (republished from the FT)
GuruSpeak | Puneet Tewani, an algo trader who deploys 20 intra-day strategies
Cummins India: No re-rating on the cards
Divi’s Labs: Vertical integration keeps it ahead of peers