India’s GDP contracts by 7.5% in second quarter of FY 2021
For the second quarter in a row, the Indian economy contracted by 7.5 percent during the July-September quarter, and entered a technical recession in the aftermath of the COVID-19 pandemic.
India’s 8-core industries growth declines to -2.5% in October
India’s eight core industries growth stood at (-)2.5 percent in October 2020, in comparison to (-)0.8 pecent in September 2020. The data showed that the growth in the April-October 2020 in the eight-core sector was (-)13 percent in comparison to 0.3 percent on a yearly basis.
Also, September 2020’s industries growth has been revised to (-)0.1% per cent against -0.8% earlier (YoY).
GDP Q2 Data Updates | Wondering if India’s economy is actually on the path to recovery?
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GDP Q2 Data Updates | Industry Expectations
Dr. M. Govinda Rao, Chief Economic Advisor, Brickwork Ratings: “We had estimated the contraction in the second-quarter GDP at about 13.5 per cent. The leading indicators of the economy did not record significant recovery until September. The trade, hotels and transport sectors did not show much recovery. Recovery in the construction sector was patchy due to the non-availability of migrant labour; manufacturing suffered from both labour shortage and supply disruptions. Floods in many parts of the country created disruptions in the farm sector, and government expenditure was stagnant. Thus, although the relaxation of the lockdown resulted in an improvement in economic activity to some extent, the capacity utilisation continued to be low.”
GDP Q2 Data Updates | Market Expectations
Jyoti Roy, DVP- Equity Strategist, Angel Broking: “Markets will focus more on high-frequency indicators like PMI, auto sales and power demand which point to a significant acceleration in the economy from October due to festive demand and opening up of the economy. PMI and auto sales numbers for the month of November are expected in the first week of December which we believe will be more crucial for the markets.”
GDP Q2 Data Updates | Industry Expectations
Mr. Mohit Ralhan, Managing Partner & CIO, TIW Private Equity: “The expectation is of a contraction of 8.8% in the September quarter. But RBI has indicated towards stronger than expected pick up of the economy and our experience on the ground has also been the same. I will not be surprised if the contraction comes to be lower. Anyways, we are expecting a strong recovery in the next financial year.”
GDP Q2 Data Updates | Market Expectations
Rusmik Oza, Executive Vice President and Head of Fundamental Research-PCG at Kotak Securities: “Q2 GDP may not change the mood of the market as everyone has built in the negative impact and the sequential recovery that is likely to come through. The market is way ahead of the economy in terms of valuing stocks. Everyone is now focussing on FY22 numbers and valuing stocks accordingly Going ahead, we need to watch the impact of second-wave and fresh partial lockdown measures being taken by various states. Any prolonged impact of second-wave could impact the recovery of GDP and to that extent marginally impact the market in near future.”
GDP Q2 Data Updates | Expectations
Mohit Ralhan, Managing Partner & CIO, TIW Private Equity: “The expectation is of a contraction of 8.8 percent in September quarter. But RBI has indicated towards stronger than expected pick up of the economy and our experience on the ground has also been the same. I will not be surprised if the contraction comes to be lower. Anyways, we are expecting a strong recovery in the next financial year.”
GDP Q2 Data Updates | Economic recovery stronger than expected; rising COVID-19 cases downside risk to growth: Das
After the 23.9 per cent GDP contraction in the April-June quarter following the COVID-19 pandemic, economic recovery momentum has been stronger than expected, Reserve Bank Governor Shaktikanta Das said on November 26. He however, said there is need to be watchful of the demand momentum sustaining after the festivities as well, and also warned of downside risks to growth coming from a rise in virus infections in select pockets.
The heavy contraction in Q1 was attributed to the near-complete chilling of all economic activity in the wake of one of the strongest lockdowns enforced anywhere in the world. The RBI, which has introduced many unconventional measures to aid recovery apart from cutting key rates by 1.15 per cent, expects the economy to shrink by 9.5 per cent in FY21.
“After witnessing a sharp contraction in the economy by 23.9 per cent in Q1 and a multi-speed normalisation of activity in Q2, the Indian economy has exhibited stronger than expected pick-up in momentum of recovery. We need to be watchful about the sustainability of demand after festivals and a possible reassessment of market expectations surrounding the vaccine, Das said.
– PTI
GDP Q2 Data Updates | Q2 GDP prints likely to show significant sequential pullback; will it cheer the market?
GDP Q2 Data Updates | Q2 GDP prints likely to show significant sequential pullback; will it cheer the market?
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Care Ratings estimates the contraction in the July-September of this fiscal year, to be 9.9 percent, while rating agency ICRA estimates it to be 9.5 percent.
