Flatten India’s Curve And Mitigate The Spread Of COVID-19

Flatten India’s Curve And Mitigate The Spread Of COVID-19
Flatten India’s Curve And Mitigate The Spread Of COVID-19
Deepika Asthana - 04 April 2020

As each day passes, market participants across the globe have to contend with newer challenges. The number of people infected with COVID-19 globally has crossed the 1 million mark. Despite a more a week of lockdown, India is yet to see its curve flattening with the number of infected increasing at a fast clip. At the same time, macro-economic data coming in is pointing to job losses and an imminent economic slowdown. In such an environment, there are days when markets bounce back to register gains. However, such movements can be tricky and can trap investors. Volatility continues to rule the markets as they oscillate between gains and losses. Indian markets started the week on a positive note after data showed that manufacturing activity in China rebounded from record lows in March and certain signs indicated that lockdown across much of Europe could be starting to have the desired effect of slowing the rate of new confirmed cases. However, these data points were lost in the sea of negative updates which eventually pulled the markets lower to trade with losses. The global risk off sentiment further exacerbated the sell-off with foreign portfolio investors selling a record Rs 65,816 crore worth of Indian equities in the month of March 2020.

Economic woes

The International Monetary Fund (IMF) chief Kristalina Georgieva confirmed everybody’s concerns regarding an economic slowdown by announcing on Friday (27 March) that the world has clearly entered a recession. She further added that the COVID-19 pandemic has driven the global economy into a downturn that will require massive funding to help developing nations.

Macro-economic numbers at home showed at India’s manufacturing sector growth has slowed to a four-month low in March 2020 as the nationwide lockdown to contain the COVID-19 outbreak brought economic activity to a virtual halt. The manufacturing Purchasing Managers’ Index (PMI) for India declined from 54.5 in February 2020 to 51.8 in March 2020. Other lead indicators also confirmed fears of a slowdown. While the goods and services tax (GST) collection fell to Rs 97,597 crore in March 2020, India’s largest carmaker Maruti Suzuki India Ltd.’s domestic vehicle sales also plunged by 48 per cent to 76,976 units during the month.

Recognising the impact of the lockdown on the economy and its repercussions on the credit conditions in the regions, S&P Global Ratings slashed India's growth forecast to 3.5 per cent for the coming fiscal from a previous downgrade to 5.2 per cent.

Economic woes aside, the primary concern currently is to flatten India’s curve and mitigate the spread of COVID-19 in the country. All of us play an important role in this agenda. Stay home, stay safe.

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