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Moneycontrol Pro Panorama | Is Omicron losing its sting? 

In today’s edition of Moneycontrol Pro Panorama: ICICI Lombard makes the cut, the way forward for L&T Infotech, Budget Chart of the Day, Crypto Learn and more

January 20, 2022 / 04:08 PM IST
Omicron | Representative image

Omicron | 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.

Two years of battling the COVID-19 pandemic is enough reason for gloom spreading across the world. Currently, many countries, including India, are in the grip of surging cases of the Omicron variant. Indeed, it continues to exert pressure on healthcare systems and flummox policy makers on the pace at which they should be winding down the stimulus measures put in place to support the broad economy.

Still, the Omicron wave’s pattern of rapid rise and fall in advanced countries and lower fatalities compared to the Delta variant yields a flicker of optimism that the economic rebound is not far away for most countries. A Nomura report dated 19thJanuary explains that the ‘fear factor’ of COVID-19 could soon fade, stating that it seems clearer now, than any time in the past two years, that the pandemic is transitioning to an endemic COVID-19. The report, which analysed the situation in five countries – South Africa, the UK, Canada, Australia and Ireland – with advanced Omicron waves, estimated that it took, on average, 31 days for the number of new daily cases (on a 7-day moving average basis) to peak.

Certainly, one outcome of a less fierce wave raises hope of renewed demand for services, be it education, sports, recreation, travel and tourism and restaurants, all of which were severely impacted due to sporadic waves, lockdowns and restrictions. Highlighting the case of US, the report says that in Q3 2021 “we estimate that American household consumption of goods surged to 7.6 percent above its pre-COVID trend, whereas consumption of services fell to 4.8 percent below its pre-COVID trend”. However, there could be a shift in household spending from durable goods that were so far in demand over the past two years to services. The Nomura report also points to seven other countries where this trend could pan out as the Omicron wave ebbs.

Close

The moot question is, will a similar trend pan out in India? The latest bulletin put out by the Reserve Bank of India (dated 17thJanuary, 2022) paints a mixed view of the state of the economy. Manufacturing and several categories of services are in expansion. Aggregate demand conditions remain resilient. However, it does highlight that the pandemic severely dented consumer confidence in India, “with sentiments of households across strata influenced by the spread of infections and fatalities”.

But on a brighter note, it says Omicron may turn out to be more of a flash flood than a wave. How this actually plays out in India, where the wave is plateauing in some of the metros where it spiked but is spreading to other parts, will become known in coming weeks and months. The hope is that India's experience is no different from that of the countries mentioned in the Nomura study, as that would be a welcome relief to the economy and investors.

Investing insights from our research team

ICICI Lombard Q3 earnings muted, but the stock is a long-term compounder

L&T Infotech – Can the stellar show result in further rerating?

LTTS: Is the recent pullback a good entry point in this global player?

JSW Energy: Recent huge outperformance could limit stock returns in the near term

What else are we reading?

Budget Chart of the Day | Tax to GDP ratio is rising

Oxfam, Inequality, Capitalism, and the Stock Market

Start-up India 2.0 — Success hinges on policy relook

Start-up Street | Surprise Topper: Tech services dominate PE deals in 2021

Max Healthcare’s mega capex plan’s success counts on deft execution

The ‘S’ word — synergies — is back (republished from the FT)

Budget 2022 | Support to real estate sector will positively impact entire economy

Learn: Crypto Learn: What is DeFi?

Technical Picks: JSW SteelIEXIndia Cements and Gujarat Gas (These are published every trading day before markets open and can be read on the app)


Vatsala KamatMoneycontrol Pro



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