Moneycontrol Pro Panorama | The economic impact of Omicron

Representational image: Reuters

Dear Reader,

Omicron numbers are turning ominous. India reported 117,100 new COVID-19 cases in last 24 hours, the highest since June.

A new modelling study by the Indian Institute of Science and Indian Statistical Institute, Bangalore, has predicted that this wave of the pandemic will peak by the end of January or early February. The all India COVID-19 cases curve will start flattening by March, it has forecast.

While initial reports and data suggest that the Omicron strain is leading to fewer hospitalisation and fatalities, its increased contagiousness means that peak daily cases could well be around a million a day in India. Remember that during the second wave, cases had peaked at 400,000 a day.

The sheer number of cases could strain the medical infrastructure in the country. Look at what’s happening in the US, for example. Even though the hospitalisation rate is just 25 percent of the earlier wave, the peak in daily cases is around 4 times that of the previous waves; hence, absolute hospital admissions are at the same level as during the last wave.

Can India’s healthcare system face the onslaught of this tsunami with confidence? That’s the question our Herd Immunity Tracker explores today. We also have a piece on what the Omicron wave means for listed companies in the hospitals/healthcare sector.

On a related note, what does this sharp rise in cases mean for the economy?

A few states have imposed night time and weekend curfews to stem the tide of rising cases. Will we see more stringent lockdowns? As of now there isn’t enough clarity although a few states have provided some guidance — Maharashtra, for example, has said that it will introduce lockdown like restrictions when 40 percent of COVID hospital beds are occupied.

For now, economists are sitting on previous estimates. In a note yesterday, DBS Research said that the “economic impact is likely to be shallower than the second wave, drawing on past/international experience.” It has retained its GDP forecasts while building in downside risks and also expects a slower policy normalisation accompanied by gradual reduction in fiscal deficits.

Investing insights from our research team

Venky's – Accumulate For The Long Haul

Weekly Tactical Pick – CSB Bank

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Titan: Strong quarter; to outperform in current scenario

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The energy sector has a gas problem 

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  (These are published every trading day before markets open)

Also, check out MC30, our curated basket of 30 mutual fund schemes from the 1,660 available in the Indian market. This will help you build a solid mutual fund investments portfolio.

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Ravi Krishnan

Moneycontrol Pro