The break yesterday did help – not the anxiety pangs but the market. Looking at the way in which negative news has been pouring in from all sides, its good the market was closed yesterday. Or else we would have heard the same old headlines – bloodbath, bloody Wednesday, Black Wednesday; get the gist?
The second wave as history has shown us time and again, seems to be as deadly as promised, yet we seem to be caught unaware. The roads in Mumbai are once again deserted, fear stalks the heart, migrants are thronging the trains and buses, again in a panic rush to get out the state. Alongside all this, what is new this time is that there are long, really long queues for getting the RT-PCR tests done at almost every single center. Patients are not able to find beds, there is a shortage of oxygen and the story of Remdesivir, we all know by now. What is really unnerving is when the CM of the state, on TV, says that the situation is scary; when a leader says that, it means he/she does not know where things are headed. Maharashtra has become the dancing ground for corona, waltzing with the God of death.
For the markets, this is not good news at all. The financial capital under a curfew and lockdown order means the country needs to step back and see where growth is headed now. RBI itself will now need to recalibrate its targets. There is absolutely no doubt that unless Covid disappears overnight completely, India’s growth prospects for FY22 appear to be dimming again as the virus takes a toll on economic activity.
It is unbelievable that it was only last week that IMF hiked India’s GDP forecast from its earlier 11.5% to 12% for FY22; so did the slew of rating agencies like Moody’s, Fitch, S&P. And just a week later, we are now staring at an almost repeat of last year- not a complete standstill but when mobility of people is restricted and supply chains once again come unhinged, definitely, economic growth will be impacted. Not to anyone’s surprise, many have started cutting down the growth forecasts. Barclays India chief economist Rahul Bajoria said that the economic cost of the latest shutdowns is around Rs 8,000 crore per week.
Well, like the last time around, this time too, those who will stand to gain will be the FMCG sector, agriculture, pharma companies, testing labs, e-commerce, fitness and wellness sector, digital streaming companies like Netflix, Amazon, Zee5, Voot, Hotstar. The gains continue for online gaming and education platforms. And let’s not forget the broking firms – with a huge new set of retail investors getting added on, brokerage firms will continue to rake in the moolah. IT services will continue to do well as they are expected to be less affected amidst this uncertain environment, with cash-rich balance sheets, higher RoE.
And yes, of course, talk of more stimulus coming from the Govt is back but how far that will go on to improve the sentiments and more importantly, remove that sense of fear, is an unknown. And the banks? Are they willing to take on more?
The market is always forward-looking and maybe in the next few days, the volatility it will see in the coming days, will settle a bit. But for that to happen, it will all depend on fast-tracking the vaccination drive. The more and more we get vaccinated, the lesser will be the burden on healthcare, leading to lesser or no lockdowns. Wonder why it took so long for the Govt to get going on importing Pfizer, Moderna and J&J? Why isn’t the Govt taking help from the private sector to get more people vaccinated? We had that window period when cases were low but we used that time to build vaccine diplomacy. And even now, instead of getting all over the age of 25 getting jabbed, we are dragging our feet.
India was caught napping very badly as the pandemic took a backseat with all attention diverted to election campaigning and we all are paying a very big price – some with the life of a loved one or through health or through loss of livelihood or living this life of fear and stress, all over again.