Virus Variant Impacts Domestic Recovery

Virus Variant Impacts Domestic Recovery

Tata Motors overtook Hyundai to become the second-largest seller of passenger vehicles in the domestic market for the first time in close to a decade

Indian headline equity benchmark indices Nifty 50 and Sensex started 2022 with a bang, recording healthy gains of 4.76 per cent and 4.59 per cent over the fortnight. Likewise, BSE Mid-Cap and Small-Cap indices also climbed 4.58 per cent and 5.87 per cent, respectively. According to the Ministry of Statistics and Programme Implementation, India’s GDP will likely grow 9.2 per cent in FY22 aided by an extremely favourable base effect, with the GDP having contracted by a record 7.3 per cent in FY21 on account of the pandemic. The estimated GDP growth rate of 9.2 per cent is the highest in at least 17 years. 

Domestic rating firms Brickwork Ratings and India Ratings and Research cut their projections on India’s fiscal 2022 economic growth, citing a possible impact of the third wave of the corona virus led by the more infectious Omicron variant. Brickwork Ratings revised its estimate on India’s GDP to 8.5 to 9 per cent from 10 per cent, while India Ratings and Research cut its forecast to 9.3 from 9.4 per cent. Brickwork Ratings expects agricultural activities to be resilient over the fiscal and believe that manufacturing and services sectors will bear the brunt if the current situation aggravates further.

As per data released by IHS Markit, India’s manufacturing purchasing managers’ index (PMI) lost momentum in December 2021 and fell to 55.5 from 57.6 in November 2021 amid fears that the rapidly spreading third wave of the pandemic may hit consumer sentiment and output. The index has eased to a three-month low after hitting a 10- month high in the previous month. Automotive sales numbers for the month of December were a mixed bag. Demand for the two-wheeler and tractor segments continued to remain under pressure, while the commercial vehicle segment witnessed volume recovery by virtue of pick-up in economic activity. Maruti Suzuki, the country’s largest passenger car maker, reported a 4 per cent drop in total sales at 1,53,149 units. Meanwhile, Tata Motors overtook Hyundai to become the second-largest seller of passenger vehicles in the domestic market for the first time in close to a decade. BSE Auto index was the top gainer over the fortnight, surging 6.25 per cent. According to ratings agency ICRA, the Indian pharmaceutical industry is estimated to grow at 9-11 per cent in 2021-22 and in the next few quarters it will be driven by domestic and emerging markets.

In a sample of 21 domestic pharmaceutical companies, the ratings agency said that revenue growth was moderate at 6.4 per cent in Q2FY22, down from 16 per cent in Q1FY22. 

According to the Ministry of Statistics and Programme Implementation, the construction sector is likely to grow in double digits at 10.7 per cent in FY22 due to the government’s increased focus on infrastructure projects and smart recovery of demand expected for residential as well as commercial segments. Trading data shows that during the fortnight DIIs were net buyers to the tune of aRs 7,523.59 crore and FIIs were net sellers to the tune of Rs 1,849.27 crore.

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