● Earnings: In FY21, the market is now expecting Nifty Earnings to grow in double digits. This is likely to e achieved even with a high Single digit decline in GDP. The shift in market share from Unorganised to Organised is likely to continue in this quarter as well given that the Supply Chain of the Unorganised is still broken and in some cases even if the Supply chain is fixed, the Distributors have stuck with the Organised guys.
The market is also expcting Earnings to grow at more than 20 pc in FY22. Given the sharp inflation in some of the commdoities, it will be interesting to see as to how much Pricing action is taken by Cos, without impacting volumes.
● Covid: The daily number of new cases (7DMA) has increased from 11,000 in mid- February to ~ 62,000 now. Recall, the first wave peaked at 93,000 in mid-September. The positivity rate (new cases per 100 tests), has more than tripled over the last 6 weeks from 1.6% in mid-February to 5.9% at the moment. Recall that the positivity rate was close to 9.0% at the peak of the first wave in September. However, the mortality rate continued to fall, reaching 1.33% last week from 1.43% in mid-February and 1.8% at the peak of first wave in September. Compared to the first wave, however, the second wave is more concentrated for now, with six states accounting for more than 80% of new cases compared to 60% at the time of first peak. Maharashtra alone accounts for a remarkable 60% of new cases. Up to now there does not appear to be a material impact on national mobility and activity. However, mobility has started to take a hit in the states where COVID-19 is proliferating, such as Maharashtra and Punjab. The authorities have imposed some local restrictions to contain the spread of COVID-19. However, if cases continue to rise sharply and medical infrastructure gets overwhelmed then the authorities may be forced to impose stringent lockdowns. All that said, ramping up the vaccination drive could effectively break the link between mobility/activity and the proliferation of COVID-19 cases.
● Vaccination: India inoculated ~60mn+ citizens against Covid by end-March. Starting April, the government planned to extend the vaccinations to all citizens above the age of 45 years, irrespective of their medical history.
● Elections: More than ~180mn people will be eligible to vote in 5 upcoming assembly elections (Tamil Nadu, Kerala, West Bengal, Assam, & Puducherry) which started in March. The results will be announced on May 2nd.