● Budget: FM’s Budget Speech lifted market sentiments as it didn’t raise / add any new tax and showed a clear intent and directional focus towards some of the important topics like Privatization, Manufacturing and Capex Push. Prioritizing Capex over Revenue Expenditure held the promise of creating more jobs and lifting long term growth potential.
● 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 has continued 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.
● This has turned out to be the best earnings season in a decade so far with the extent of beat, broad-based sectoral participation in earnings, consequent upgrades and upgrade/ downgrade ratio. Barring NBFCs, all other sectors have beaten earnings expectations.
● Covid: India reached the peak of the COVID-19 pandemic in mid-September and witnessed steady declines in daily cases and number of deaths since then. Daily new COVID-19 confirmed cases averaged ~12.5k in February vs. ~15k in January and ~25k in December. Daily COVID-19 related deaths averaged 99 in February, lower than January (175) and December (366). Although daily tests at 709k/day in February were lower vs. January (774k/day), the positive rate increased marginally to 2.0% in end-February vs. 1.9% in end-January. Globally, India has the fourth-highest number of deaths at ~157k behind the US, Brazil and Mexico. However, the mortality rate has been trending lower at ~1.4% while the recovery rate continues to pick up ~97% (vs. ~96% in end-Dec).
● Vaccination: In a month and a half, India administered ~13.8mn doses to healthcare & front-line workers. Starting March 1, govt. planned to start the 2nd phase that will cover ~100mn people who will be vaccinated at 10k govt / 12k private centres.
● Elections: More than ~180mn people will be eligible to vote in 5 upcoming assembly elections (Tamil Nadu, Kerala, West Bengal, Assam, & Puducherry) starting in March. The results will be announced on May 2nd.