- Increases in demand in several sectors are behind a rebound in economic activity and a rebound in corporate profits.
- Mobility across India exceeded pre-pandemic levels for the first time in September, according to Google’s COVID-19 Community Mobility Report.
- In addition, as the festivities begin and economic activity explodes, many sectors see the surge in demand as a domino effect.
As sectors such as railways, travel agencies, hotels and luxury goods companies begin to report steadily improving demand and sales, it becomes evident that the economy is returning to normal or , say, at the pre-pandemic stage.
Signs of a return to normal can also be seen in improving mobility trends. Mobility across India exceeded pre-pandemic levels for the first time in September, according to Google’s COVID-19 Community Mobility Report.
With this, the daily consumption of electricity has also increased due to which the Ministry of Energy has asked the power plants to optimize the use, which eventually allows the coal plants to function fully.
“Daily electricity consumption has exceeded 4 billion units per day and 65-70% of the demand is met only by coal-fired power generation, thus increasing dependence on coal,” the ministry said. Energy.
Mobility between retail, recreation, grocery, drugstore, parks, transit stations, work and home locations turned positive during the second half of September and began to grow. has continued to increase since, according to data from Google’s Covid-19 community mobility reports.
âIndividuals are eager to spend time outdoors and travel again,â Quint Yuvika Singhal, economist at QuantEco Research, told Bloomberg.
Plus, as the festivities begin, the trend only seems to be accelerating with demand across industries.
Credit card spending has surpassed pre-pandemic levels
The trend in consumer spending also largely explains the country’s economic activity, which is currently experiencing a positive recovery. There are 63.9 million credit cards in the country, which are typically used to purchase electronics and other high-value products, which explains the purchasing power of consumers.
With festive fervor playing, credit card spending rose 54%, according to Reserve Bank of India (RBI) data to 77,981 crore in August 2021, even more than 62,902 crore in February 2020, before that the pandemic does not curse everything.
âWe are witnessing a significant recovery [the] on the ground, which shows that consumer spending is back, âParag Rao, group leader – payments, consumer credit, digital banking and information technology at HDFC Bank, told The Economic Times.
Not only credit spending, but attractive mortgage rates, auto loan rates from banks say a lot about improving consumer spending and economic recovery.
Banks’ mortgage portfolio grew 8.9% year-on-year to 14.66 trillion yen through July, according to RBI data.
Currently, mortgage lending in the country is at an all-time low, at around 6.5% -7%.
Improving lending activity means improving bank finances and as a result most bank stocks have performed well over the past six months:
|Banks||% of returns in the last 6 months|
|National Bank of India||41%|
|National Bank of Punjab||17%|
The domino effect of the economic recovery has worked well for the Indian hospitality industry
Revenue per room occupied in the June quarter in some leisure destinations has already exceeded pre-pandemic levels, reflecting the encouraging trend in demand, according to an ICICIdirect report.
The business segment (stay), which has lagged so far due to working from home until the first quarter (April-June), also experienced some traction during the second quarter (July-September). 2021), the report added.
Additionally, analysts expect tourism demand to reach pre-pandemic levels sooner than expected. The government announced on Tuesday that domestic flights will operate at full capacity from October 18.
Investors in shares of hotel companies have already taken into account the positives as they expect the industry to accelerate along with economic activity.
Shares of hotel companies have rallied dramatically over the past 6 months, showing increased demand for the space.
|Hotel company||% of return in the last 6 months|
|Hotels in Kamat||129%|
|Indian Hotel Company||103%|
|Asian Hotels (North)||37%|
|Taj GVK Hotels||35%|
Rather, the IRCTC was the first to benefit from the recovery in motion
While international flights remained closed for a long time, interstate travel accelerated for the Indian Railway Catering and Tourism Corporation (IRCTC). In fact, spotting an emerging trend in interstate travel, the IRCTC launched several trains in 2021, including travel packages for pilgrimage sites.
The increase in train bookings was reflected in the company’s financial statements, which made a profit of 82.53 yen crore in the June 2021 quarter, compared to a loss of 24.60 yen crore in the last quarter. the same period last year.
The company’s aggressive expansion strategy and increased train bookings have rallied its publicly traded stocks. In addition to online ticketing services, IRCTC has also started to focus on the hospitality sector by partnering with hotels, travel and travel service providers, local food suppliers and retailers. Airlines companies.
IRCTC stocks have been in the limelight for the past six months, as they have tripled investor money by rising 203% since April 2021.
Shares of casino company Delta Corp nearly doubled in past three months
Benefiting from the boom in the tourism and travel industry, casino operating company Delta Corp saw an increase in sales from July to September. The company’s net sales nearly doubled to 74 crore yen in the September quarter, from 38 crore yen in the same quarter a year earlier. The company operates casinos in Goa and Sikkim where the government has legalized gambling. It also operates hotels under several brands.
The company’s net sales doubled even as it operated casinos and hotels with 50% capacity, in line with government restrictions.
Ecommerce platforms and retail chains explode with the ease of restrictions
While e-commerce companies, offering groceries, like Amazon, Flipkart, JioMart, DMart, BigBasket, continued to operate during the lockdown, they faced a supply shortage in the early days of the lockdown. , Last year. Now, with the ease of restrictions as well as holiday sales, these platforms are attracting shoppers with deep discounts.
Ecommerce platforms, including social commerce and grocery shopping, generated around $ 2.7 billion in sales in the first four days of the festive sale (October 2 to October 5), the firm said. RedSeer Consulting.
Additionally, these platforms are expected to potentially exceed $ 9 billion in gross GMV (gross value of goods) throughout the holiday season this year, up from $ 7.4 billion last year.
Real estate developers back in action with growing demand
With growing consumer power and record mortgage rates, offers from real estate developers are helping real estate companies gain momentum in the residential and commercial real estate segments.
India’s top seven real estate markets are said to have recorded a more than 124% increase in year-on-year home sales between July and September, as the country began to cautiously return to normal economic activities in various states, supported by vaccination campaigns aggressive.
Now, with the holiday season looming, developers are offering various discounts such as direct price discounts, deferred payment plans, and other incentives like no pre-EMI (monthly payments) for customers. properties under construction, waiver of floor elevation and the car. parking fees, free household furniture, attractive gifts and so on to attract fence guards and potential home buyers.
The real estate segment that was reeling from weak demand due to foreclosure restrictions and weak economic activity is now back with a pickup in demand.
The shares of most real estate developers have risen significantly over the past month.
|Real estate agents||% return in the last six months|
|Macrotech Developers (Lodha)||155%|
|Indiabulls Real Estate||90%|
|Properties of Godrej||86%|
|Real estate Sunteck||73%|
|Prestige Real Estate Projects||56%|
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