Virendra Pandit
Mumbai: With the Maharashtra Government bracing for a possible, partial ‘lockdown’ from April 15 to contain the spiraling numbers of Covid-19 cases, the benchmark Sensex at the Bombay Stock Exchange (BSE) crashed 1,700 points to close at 47,883, while Nifty closed at 14,300.
On Monday, India overtook Brazil to become the second most coronavirus-infected country in the world, after the USA. India now accounts for one in every six infected people in the world.
As the week began on Monday, India reported nearly 169,000 new Covid-19 cases with 904 deaths in the last 24 hours, according to data from the Union Health Ministry. The total number of cases now stood at 135,27,717, including 12,01,009 active cases at present and 121,56,529 recoveries. The death toll has risen to 170,179, and more than 10.45 crore people have been administered the Covid-19 vaccine since January 14, 2021.
Maharashtra, which reported a rise of over 63,000 cases and 381 deaths on Monday, is likely to witness a two-week ‘lockdown’ and that may have a big impact on the economic activity as the state is a big industrial hub of the country.
Indications of what may come next had started pouring in last week. For instance, global brokerage Nomura lowered its growth expectations for India to 12.6% in the new fiscal year from 13.5% earlier. The revision reflected the pandemic drag on the economy and marginally lower retail inflation, the firm said in a report on Friday.
The spiraling Covid-19 numbers quickly impacted the sentiments and parameters of the economy. Some migrants, fearing job losses, started returning to their home states, despite the little possibility of a comprehensive, nationwide lockdown unlike in 2020. The Maharashtra government could impose partial, localized lockdowns, or stringent curbs, from April 15. April 13 is the western state’s New Year (Gudi Padwa), followed by Dr. BR Ambedkar’s birth anniversary (April 14).
Even in other states like Madhya Pradesh, the state governments have only imposed ‘corona curfews’ not lockdowns. Major business establishments and industries, except in severely affected areas, have been allowed to work as usual.
The domestic indices came under pressure because of the sharp rise in Covid-19 cases over the weekend and growing concerns over states considering lockdowns after the daily increase in cases rose from around 1 lakh on April 4 to around 1.7 lakh cases on Monday.
The surge in numbers globally has also raised concerns worldwide. Indian markets followed other major Asian markets. Nikkei in Japan, Hang Seng in Hong Kong, and Shanghai Composite in China fell between 0.5 percent and 1 percent on Monday.
Return of the pandemic fears has begun to tell on global markets as they are concerned over the impact on economic activity and GDP growth for the current financial year.
The continuing rise in the number of Covid-19 cases over the last six weeks also had an impact on the industrial sentiment and India’s manufacturing sector activity weakened sharply in March, with the IHS Markit India Manufacturing Purchasing Managers’ Index (PMI) slipping to a seven-month low of 55.4 in March from 57.5 in February.
The fresh surge in cases has raised concerns all around. While market participants feel that the economy will not close down the way it did in April and May 2020, this second wave could derail the recovery process of the economy and delay a return to normalcy. There is growing concern over looming restrictions across states which are considering lockdowns and curfews.