Consumer Durables News

Markets spooked by Covid surge, return of curbs


Panic gripped the stock market on Monday as the lockdown announced by the Maharashtra government is expected to impact a cross-section of sectors, including banking, automobiles, tourism/hospitality, consumer durables and infrastructure.

Benchmark index Sensex fell 870 points, or 1.74 per cent, to close at 49,159. The Nifty index was down 229 points, or 1.54 per cent, at 14,637.

The Covid situation has been worsening in Maharashtra since February, with the State reporting more than 57,000 daily new cases, accounting for more than half of the country’s total new infections. This has prompted the State to go in for a lockdown. This, according to rating agency CARE, will mean a potential loss of gross value added to thr State of ₹40,000 crore.

Maharashtra is the largest State in the country in terms of GSDP (Gross State Domestic product) and has a share of around 15 per cent in GVA. Many businesses, already functioning under restrictions, were yet to attain the pre-pandemic scale of operations. “The impact on some sectors could be more severe on weekends, when consumption by individuals is likely to be more for entertainment, hospitality, discretionary spending, among others,” CARE Ratings said.

F&B industry sees big hit

Players in the hospitality sector said the second lockdown will practically ring the death knell for the F&B industry. “Apart from loss of revenue due to non-existent diners, restaurant chains also need to pay rent on real-estate. Lease rental is the highest fixed cost component besides payroll and other operational costs. This is a huge financial burden on restaurants in the absence of any cash flow during the extended lockdown,” said Ankit Mehrotra, CEO & Co-founder, Dineout.

Expressing similar views, Kumar Rajagopalan, CEO, Retailers Association of India (RAI), said, “The retail industry will again start experiencing severe liquidity challenges. The new order will have a contagion effect on the entire retail ecosystem in the State and across the country majorly impacting manufacturing and employment of millions.”

However, many players said they are better prepared this time compared to last year. “We are applying learnings from last year on streamlining the supply chain to ensure minimal disruption in supplies. Some of the measures implemented last year, like order-booking though our call centres and WhatsApp, continue to function and have, in fact, been stepped up. In addition, we have increased the frequency of supplies to distributors and outlets in the impacted markets to tide over any potential impact,” said Adarsh Sharma, Executive Director-Sales, Dabur India Ltd.

Corroboration came from Manish Sharma, President & CEO, Panasonic India & SA: “While the pandemic caught us off guard last year, Panasonic is now well prepared with stocked inventory to ensure smooth purchase experience for our partners and consumers offline and online.”

Stock market watchers said that investors are likely to follow cues from the US market for the rest of the week. The US markets opened on a positive note and touched new highs. The Dow Jones, S&P and Nasdaq, key US indices, started the week with gains of 0.8- 1 per cent.

(With inputs from Forum Gandhi)


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