After extending buying support to the Indian stock market for the last one year, foreign institutional investors (FIIs) turned net sellers as the second wave of Covid-19 started impacting the economic activity amid localised lockdowns imposed in several states. Resurgent number of Covid cases is a major cause a concern for both the global and Indian markets. As a result, foreign portfolio investors (FPIs) have started pulling out their investments. FPIs withdrew Rs 740 crore from the Indian equity market. This is a reversal from the bullish sentiments among the foreign investors over the past one year. The market capitalisation (mcap) fell by Rs7 lakh crore on April 12 (Monday) as mcap of BSE declined to Rs202.29 lakh corre.
The net FPI investments into the equity market in 2020 stood at Rs 55,002 crore as against Rs 19,473 crore in January, Rs 25,787 crore February and Rs 10,482 crore in March.
The sell-off in April comes amid the rising cases of Covid-19 and the possibilities of partial localised lockdowns, which may bring a halt to the reviving economic and business activities, observe market analysts. Further, weakening of the India rupee also has led to the outflow of foreign funds. On April 9, 2021, the Indian rupee depreciated for the fifth consecutive day and closed at 74.74 per dollar.
CEOs prefer strict safety norms on partial lockdowns
According to a latest survey carried out by the industry body CII, majority of business firms suggested the government to impose strict norms wherever the partial lockdowns are proposed. The captains of the industry became alert amid rising Covid cases and partial and total localised lockdowns. Majority of the CEOs in India believe that along with the ongoing vaccination drive, stringent implementation of safety norms should be adopted instead of going for restrictions and partial lockdowns, according to the CII survey.
TV Narendran, president designate of CII, said: "Stringent enforcement measures to promote strict adherence to health and safety protocols are essential and any measures to restrict social gatherings should not be extended to regular functioning of industry and commerce."
Around 75 per cent of the 710 CEOs polled were of the view that partial lockdown measures could impact the movement of labour as well as movement of goods, which would affect industrial production significantly. About 60 per cent of the CEOs said that their production could be affected if there are restrictions on movement of labour during these partial lockdowns.
Similarly, 56 per cent of the CEOs expressed their concern over loss of production of up to 50 per cent if there were restrictions on the ecosystem which supports movement of goods.
The CEOs polled pertained to both manufacturing and services and 68 per cent of the responding CEOs were from MSMEs. While the Indian industry is well prepared and equipped for implementation of stricter health and safety protocols as revealed by 96 per cent of the CEOs polled, stringent implementation of safety norms was opined to be better than the option of partial lockdowns by 93 per cent of the CEOs polled.
Narendran further added that "protecting livelihoods along with lives is essential and industry is keen to work with the Government on universal coverage (18 years and above) of vaccination programme and in implementing strict health and safety protocols."
Looking at ways to mitigate the impact of the restrictions, about 67 per cent of the CEOs of those polled expressed their desire to work with the government for mass vaccination of eligible workforce who are 45 years and above.
While 57 per cent of the companies expressed the need to stock raw materials in excess of just-in-time levels to meet any likely shortage of raw materials, about 31 per cent of the industry leaders said that they would accommodate their labour force in the factory in case of movement restrictions due to night curfew.
More than 60 per cent of the CEOs suggested that the government should allow movement of workers in all shifts during night curfews and also free movement of goods along with the required personnel to facilitate the movement of goods. This should be allowed with all workers and industry staff strictly following all health and safety protocols.
"The government handled both lives and livelihoods effectively during the first wave. It could do so again by keeping industrial activities out of the ambit of partial lockdowns aimed at restricting social gatherings. This will help India recover from the economic contraction and stabilize the upward growth trends being currently witnessed in several sectors," said Narendran.
Global factory output up
At a time when second wave of coronavirus is creating tremors across the world, the global manufacturing sector recorded an encouraging productivity in March 2021, according to an index published by the China Federation of Logistics and Purchasing (CFLP).
The global manufacturing purchasing managers' index (PMI) stood at 57.8 in March, up by 2.2 percentage points from the previous month, according to the CFLP, Xinhua reported. PMI above 50 indicates positive trend for the industry. China's manufacturing PMI came in at 51.9 in March, edging up from 50.6 a month ago, official data showed.
The reading, which marks the second monthly increase, remains in the expansion zone for the ninth consecutive month and indicates further economic recovery worldwide, it said in a statement.
The federation attributed the faster growth to market confidence boosted by Covid-19 vaccines, fiscal and monetary policies of developed economies, and world trade recovery.
The CFLP, however, warned that despite the rebound, a resurgence of Covid-19 cases and global inflation worries can still bring uncertainties to the world's economy.