The beginning of the week, which saw COVID cases across the nation skyrocketing, coincided with the BSE Sensex plummeting by as much as 1,811 points (or 3.65 per cent), breaking the fall at under-48,000 levels. The Nifty had taken a hit of 482 points, amounting to 3.25 per cent, as the index dipped below the 14,300 mark, a point that is regarded to be a psychological safety net of sorts for investors. Much to the chagrin of industry watchers, as much as Rs 7 lakh crore was wiped out in a span of three hours of trade as the market capitalisation of all BSE-listed shares dropped to Rs 201.90 lakh cr from Friday’s closing bell value of Rs 209.63 lakh cr. The sectors that had been hit significantly by Monday’s tumble include automobiles, FMCG, realty, banking and financial services.
The uncertainty in the market has only been amplified by the ferocity of the second wave, which many experts have said is doling out a much heavier toll, both in terms of rate of infection as well as fatalities. The financial and political capitals, namely Mumbai and New Delhi, which are essentially the nerve centres of all the investment action in the country have also been hit severely by the COVID crisis, the former even more so, which has once again raised anxieties pertaining to the well-being of the economy and the markets in near future.
COVID clusters denting India’s road to recovery might be just one aspect of the current financial turmoil. The business community is bracing for a potential nationwide lockdown, which could derail if not entirely decimate India’s slow march to economic recovery. Several state governments have already imposed curfews in varying degrees that have thrown a spanner in the works for enterprises across the board - from restaurateurs to shopping mall operators, to stakeholders in the entertainment, recreation, tourism, and events business, to even ordinary traders of all kinds.
The past few weeks have borne witness to India’s botched attempts at vaccine diplomacy. As thousands across the country were braving the scorching sun and standing in serpentine queues to procure units of Remdesivir, like it was reported in Ahmedabad last week, the Centre finally woke up to the reality of putting Indians first before everybody else. Placing a ban on export of drugs such as Remdesivir as well as Active Pharmaceutical Ingredients or APIs was a development that was reported on Sunday, even as several states cried hoarse about the shortage of vaccines across the length and breadth of India.
As per market analysts, investors are also adopting a wait and watch approach keeping in mind the expectations from Q4 or the March quarter. The impact of the COVID-19 pandemic on the last month of Q4, will also set the tone and the pace for the fiscal ahead, which will be nothing short of daunting. Things are only set to get harder as rising inflation remains a pain point. Having shot up to 5.03 per cent in February, inflation hit a high of 5.52 per cent in March.
It may be recalled that the Indian economy’s rise to normalcy from the first wave of the pandemic, was fraught with challenges, and we had barely turned a corner. But the way COVID cases are unravelling in India, there is every possibility that we might be in the running for an extended slowdown of the economy, from which an exit might be just a miracle.