● March quarterly earnings were broadly in-line. Strong y-o-y earnings growth came off a low base last quarter. Sequentially, Nifty 4QFY21 earnings grew at 13%. Ex-Financials, 4Q earnings grew at 18% q-o-q. Of the few large-cap earnings released in June, ONGC reported a large headline PAT beat with 4Q standalone PAT at Rs67Bn vs. consensus at Rs35Bn; even adjusted for the write-back of Rs26.1bn, underlying PAT was a beat. Coal India saw an operating beat as higher E auction ASP/t offset higher costs. ITC’s EBITDA was broadly in-line, though cigarette Revenue/EBIT was below estimates. Other FMCG and Paper EBIT was in-line.
● India’s second COVID-19 wave peaked and rolled over in early May, with new cases now trending down to 47k. Similarly, the positivity rate peaked at about 23% in early May, but has now declined to below 3%. The 7DMA of vaccine shots administered has increased sharply from under 2Mn a day in the middle of May to over 5.7Mn now. This is likely higher than current vaccine production rates. As of 30 June, ~331mn shots have been administered in India (~20% of the population has taken at least one shot). Analysis of district-wise data suggests urban locations (districts with at least 60% urban population) have administered at least one shot to 1/4th of their people, while non-urban is at 14%. This is expected, and means reopening (urban services) can happen sooner.
● Unlock: With fall in Covid cases, states eased restrictions by allowing restaurants to open with 50% capacity, longer working hours etc. However, Delta Plus variant posed a risk to phase-wise unlocking in some states.
● Fiscal Stimulus: FM Sitharaman announced another set of relief measures (~0.7% of GDP) that included credit guarantee schemes for impacted sectors / MFI-borrowers, extra allocation to ECLGS and a higher fertilizer subsidy.
● Vaccination: India surpassed US in total vaccinations with 320Mn+ by June-end. Vaccinations ramped-up post Centre took control (details here) but only ~6% of India’s adult population was fully inoculated & ~29% with the first dose.
● Monsoon: By June-end, All-India rainfall was ~13% higher than long period average with Northwest India rainfall at ~21% above LPA. Crop sowing stood at ~12% of normal area, in-line with historical trends for month of June.