Teji Mandi: Three things investors should know on November 20, 2020
Teji Mandi: Three things investors should know on November 20, 2020
Teji Mandi

India tuning up its vaccine distribution plans:

The Indian government is gearing up to vaccinate 1.3 billion people. The country is likely to procure 400-500 million COVID-19 vaccine doses by July 2021. This mass immunization drive is going to be the largest-ever the country has ever taken.

Logistics around the vaccine is the biggest hurdle that India is facing currently. Both the promising vaccines, Moderna and Pfizer, require cold storage facilities. It is the infrastructure that India lacks. Moderna's vaccine requires a temperature around zero degrees Celsius while Pfizer's vaccine needs to be stored around -70 to -80 degrees Celsius.

Adar Poonawalla, CEO of Serum Institute of India estimates the cost of vaccination to be around Rs 1,000 per person. Citing the issue around lack of infrastructure, he believes that it might take at least three years for every Indian to get vaccinated.

Poonawala's views on infrastructure hold merit without any doubt. Yet, we tend to reserve our verdict on the pricing part. Oxford's COVID-19 vaccine is also emerging as a strong contender and the story is still developing. Hence, it would be too early to have a firm view on the pricing part in our opinion.

Small-mid caps on MF's radar:

Mutual funds seem to have shifted their attention to small and mid-cap space. They have raised their stake in 53 stocks that rose 100-500%.

The list includes stocks such as JSW Steel, Thyrocare Technologies, Zensar Technologies, Persistent Systems, Mphasis, JK Cement, Uflex, Granules India, Firstsource Solutions, KPIT Technologies, Tata Communications and Ramco Systems among others.

Quality names in the small-mid cap segment have faced sharp correction due to the slowdown in the economy. The companies that have survived these times of crisis have emerged stronger while weaker ones weeded out of the system.

The fund managers are possibly seeing a huge potential in this segment. Besides, there is a favourable margin of safety on offer based on the current valuations.

Going digital? Cash still rules the roost

Despite the growing numbers of digital transactions, cash circulation has hit a record high. Ths cash circulation in August was at Rs 26 lakh crore, accounting for 12% of GDP.

ATM players said there was a temporary lull in the first few months of the lockdown, but withdrawals later shot past pre-Covid levels. While cash withdrawals have hit a record high, the average ticket size per transaction has also gone up to Rs 4,959 per ATM withdrawal.

There is a strong reason why cash continues to remain the king, despite the major push towards the digital economy. While digital payments are more of an urban trend, the majority of Indians still live in villages. They continue to prefer tried and trusted methods.

Besides, the urban market is still not at its best, post ease in lockdown. That could have kept the number of digital transactions down.

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