High frequency indicators are pointing to an economic downturn as lockdown, curfew play out across states, following a sharp increase in covid-19 cases.
In India, the impact of state-announced restrictions are more clearly showing up across high frequency indicators - they all trended down for the second consecutive week, according to a Crisil report. The CRISIL report points to the following indicators, which are leading to believe that the first quarter of 2021-22 is likely to be bad.
- Retail mobility fell 8.2 pp on average in the week ending May 02 (vs 11.4 pp decline in the week prior (ending April 25)), while workplace mobility slowed 7.1 pp (7.9pp decline a week ago)
- Toll collection (through electronic mode) declined 2%, on-week (compared to -8% in the week prior)
- Power supply grew by a marginal 0.9% on-week (compared to 1.9% contraction a week ago)
- Goods and Services Tax e-way bill collection (volume) declined 6.9% on-week for week ending April 25 (vs -6.2%, week ending April 18)
- Railway freight loading fell by 2.1% on-week (week ending May 02) (-0.7% a week earlier)
Many prominent individuals including doctors are calling for a nationwide lockdown which could aggravate the situation even further.
"More worrying signs. Hitherto considered an urban phenomenon, the second wave is closing in on rural India. The share of predominantly rural districts in new cases in April was 30%, up from 21% in March. This is still lower than the peak reached in the first wave (at 40% in August 2020)," the Crisil report has stated.
Stock markets have already lost nearly 8 per cent from peak levels seen in Feb and there are worries that there could be a further downside. Corporate earnings are unlikely to match expectations given that the first quarter of 2021-22 is at best likely to be bad.