July 21, 2024

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Pace of India’s business resumption slowed down in last week of February amid rising Covid-19 cases: Nomura

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The pace of resumption of India’s business activity ended a touch slower in the last week of February as rising Covid-19 cases across a few states weighed on mobility, brokerage firm Nomura said in note on Monday.

The Nomura India Business Resumption Index (NIBRI) eased to 98.5 for the week ended February 28, down from 99.3 recorded in the previous week as the Google retail and recreation mobility and Apple driving indices moderated, even as the Google workplace mobility improved, it said.

While this posed a near term risk to India’s economic normalisation, Nomura’s medium term projections remained intact. On average, the NIBRI rose to 98 in February compared to 93.6 in the previous month and 92.2 in December, implying a faster rate of normalisation, the note said.

The Japanese brokerage had forecast India’s growth to contract 6.7% in the current fiscal followed by a sharp rebound to 13.5% growth in FY22 on the back of tailwinds from the lagged impact of easy financial conditions, front loaded fiscal activism, strong global growth and the ‘vaccine pivot’ point.

Nomura expects the ongoing quarter to see 1% growth, a marginal improvement from the 0.4% third quarter gross domestic product print estimated by the Central Statistics Office.

While the rise in pandemic cases in Maharashtra impacted mobility in the second half of February, “With elections to be held in five states (Assam, West Bengal, Tamil Nadu, Kerala and Puducherry) between 27 March and 29 April, a rise in infection cases outside of a few states is a near-term risk to activity,” said Nomura economists Sonal Varma and Aurodeep Nandi in the note.

Power demand rose by a solid 5.6% over last week’s decline of 2.7% while the labour participation rate posted a marginal increase to 40.6% from 40.5% the week earlier, the note said.

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