The second lockdown dampened the businesses as well as consumer sentiments. However, with the gradual easing of COVID restrictions and the vaccination drive, economic activity in India is picking up pace and further upside to growth is expected as the global economy opens gradually.
Global institutions such as the World Bank and the International Monetary Fund (IMF) have welcomed India’s gradual climb out of the pandemic slump, while ratings agency Moody’s upgraded India’s outlook from ‘negative’ to ‘stable’. Normalization of economic activities continued through the month of September.
Fundamental Picks 2021 | Marwadi Financial Services
Since the August monetary policy meeting of the RBI, people have become optimistic about spending. The upcoming festive season has also contributed to the release of pent-up demand. The RBI expects economic growth to be around 9.5 percent in the current fiscal year. Sustained growth in agriculture, strong rebound in manufacturing industry and resumption of services activities are indicating recovery.
The stock market had a spectacular year on the back of the support from retail investors and domestic institutions. The base of equity investment in the country has also increased with record additions of new Demat accounts. Another encouraging sign is the IPOs. So far, in 2021, over 40 companies have floated their IPOs to raise more than Rs. 70,000 crore.
The continuous support from the government to ease the stress of the telecom sector, the production-linked incentives for auto and auto-part manufacturers also helped to lift the mood in the stock market amidst the pessimism.
Changes in stock markets from last Diwali | Marwadi Financial Services
Market outlook looks promising; our expectations on India’s further journey is backed by:
Vaccination drive picking up pace
The government’s focus on capital expenditure and continued reform push Large Foreign Direct Investment flows
With major restrictions lifted, the jobless situation has improved and low risk of unemployment is expected over the years.
Production Linked Incentive scheme for the manufacturing sector will further increase domestic demand.
However, near term risk can come from rising inflation. India still imports the bulk of its crude oil requirement and gas. Any rise in price will have to be passed on to the consumer. Other commodities like natural gas or coal have also spiked due to shortage issues across several countries.
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