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Moneycontrol Pro Panorama | Macro resilience explains buoyant equities

In today’s edition of Moneycontrol Pro Panorama: PMI cheers, economy’s wounds healing, the GDP questions, growth capsule for Aurobindo Pharma, the simmering prices and much more

June 02, 2021 / 06:30 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.

Today’s edition is packed with macro data that can give you an overview of the business environment in which companies are operating.

The IHS Markit Purchasing Managers Index reveals the manufacturing sector’s resilience, with the index for May coming at 50.8. That is down sharply from April’s 55.5 reflecting the effect of localised restrictions on business activity but a level above 50 still represents an expansion, and that is good news indeed. It shows that the localised lockdowns have allowed industrial activity to continue at a healthy level. This could become the template for future lockdowns when the next wave hits. But rising inflation remains a cause of worry, with a silver lining that the pace has softened compared to April. Do read our analysis for more insights.

If the PMI reflected manufacturing resilience, then the Moneycontrol Pro Economic Recovery Tracker signals that could continue. The easing of restrictions in several states is reflected in improving week on week change in the higher frequency indicators that we track to show how the economy is doing. Unemployment is down and sentiment is up and all weekly indicators are flashing green. You can peruse the tracker’s latest update here.

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And, GDP data for the March quarter may be a look into the rear view mirror but is important to understand how the economy looks when nearly freed of all constraints imposed by the second wave. We found that growth in gross value added during the quarter at constant prices was 3.7 percent and had gone back to where it was before the pandemic set in. That ties in with commentary of a very strong economic recovery during those months and gives credence to the optimism that has seen equities rally. What does this mean for the economy’s recovery after the second wave recedes, what’s a risk now that was not a big threat during the first wave, how does our growth outlook compare with other countries? Do read to get answers.

Here are today’s investing insights from our research team:

Aurobindo Pharma: US reopening, traction for COVID vaccine near-term growth opportunity

Dixon Technologies: Seizing the market opportunity

GMM Pfaudler: FY22 likely to be the year of integration and consolidation

V-Mart Retail: Is it the right time to look at the value retailer?

Technical picks: DLF, Vedanta, Motherson Sumi Systems Limited and Muthoot Finance (These are published every trading day before markets open and can be read on the app)

What else are we reading today?

Market share gains drive growth higher at Lux Inds and Relaxo Footwears

PNB Housing shareholders to benefit from Carlyle's offer

A new economic era: Is inflation coming back for good? (republished from the FT)

Should GST compensation be extended beyond 2022?

Want to reduce the risks of investing in Bitcoin, Dogecoin and Ethereum? Here are a few strategies from experts

Ravi Ananthanarayanan

Moneycontrol Pro
Ravi Ananthanarayanan

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