Stock Market Update-Sensex off Day’s low, Nifty below 14,350 on COVID second wave concerns
Stock Market Live: Indian equity indices, Sensex and Nifty dropped more than 2 percent Monday amid concerns over economic development as many states imposed stricter constraints to restrain the spread of COVID-19. All industries, barring Nifty Pharma and Nifty IT, have been at the crimson with banking and automobile indices dragging the maximum. Smallcap and midcap indices were down more than 2 percent every day.
Tanvee Gupta Jain out of UBS Securities talked to CNBC-TV to speak more about the reduced forecast.
Since India battles the next wave of this COVID-19 pandemic, UBS has cut its own FY22 India GDP quotes citing additional restrictions that could hit increase recovery in the nation.
She said, “What you are seeing in India right now is a second COVID wave has actually if you look in terms of new daily case count they are already thrice versus 2020 peak, and when I say 2020 peak that is September of 2020.”
Jain added, “Since February 24th we started seeing mobility restrictions getting announced, if you look at the activity indicators that we monitor closely, for instance, Google foot traffic monitor – for retail and recreation it is almost down 20 percent from the baseline. Economic activity gets impacted when we stop mobility or increases mobility restrictions.”
“At the same time, the ultra-high frequency indicators that we are tracking whether it is a UBS India financial conditions Index and even the electricity demand, e-way bill for truck movement, CMIE unemployment levels for – the last couple of weeks we are seeing that most of the indicators are showing a very mixed performance. So while power demand continues to remain buoyant most of the other indicators continue to remain subdued.”
For the FY22 growth outlook, she said, “We were at 11.5 percent prior to the second wave for our real GDP growth forecast. We are now seeing a downgrade by 150 basis points to 10 percent for FY22. The base case assumption is that the current mobility restrictions which are in place as of today almost 16 states have announced some kind of mobility restrictions whether it is a weekend lockdown, night curfew, or a state of Maharashtra where the curbs are much more strict versus other states.”
“Our sense is that if the restrictions remain in place still May and economic activity normalise by June, however, if the COVID situation continues to remain uncertain and last longer and we are already seeing that the health infrastructure is getting constraint there is a downside that India’s real GDP growth could actually slow down by a much larger magnitude of 3-5 percent in FY22.”
