INDIA’s long term outlook remains captivating, despite many short term challenges

The global spread of the corona virus (COVID-19) has affected economies throughout the world. The effect though unevenly distributed throughout the world providing opportunities to investors.Overall,we believe that inspite of the short term challenges, India’s foundation built on structural reform, the government’s fiscal policy and Reserve bank’s Monetary policy should help to pacify the current challenging market environments.

Currently India faces many short term challenges i.e. the outbreak of coronavirus (COVID-19) pandemic and the economic slowdown. Let’s take a look at the current scenario, the response of from policy makers and how it affects us?

COVID-19 a tragic but manageable shock

India before the lockdown was already facing from economic slowdown. The COVID-19 pandemic is another health crisis, and it has affected the Indian markets and policy makers. However there are some positive signs in containing corona virus.

Government’s fiscal policy was very disappointing, Indians expected more measures

To counter the economic impact of the lockdown, Government announced package of around Rs2lakh core estimated (around 1%of GDP).This package was distributed through food supply, credit support, employment schemes, and cash transfers.

Reserve Bank of India: Monetary policy

The RBI has reduced the policy repo rate by 40 basis points on 22nd May 2020.To boost the liquidity.Further the RBI has injected Rs 3.74 lakh crore in the Indian banking system.

Positive ling term economic view

Although the lockdown is imposed in most parts of the country, there are some sector that will experience a growth

1) Companies that can run their services through work from home

2) Healthcare and Sanitizers products (eg.sanitizers,soaps,medicines)

3) Telecom and IT sectors

4) Social media platforms (News channels,Social media websites and apps)

5) E-commerce websites etc.

Finally, it is also estimated that some Companies are less likely to succeed-they are

Retail,travel and tourism,accommodation,real estate, and some non-essential goods.

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