Market quote by Hemant Kanawala, Head - Equity, Kotak Mahindra Life Insurance Co. Ltd.

“The focus of the investors and nation has shifted to sudden rise in Covid cases. The central government has said that they don’t intend to announce national lockdown to control the Covid infection and has also advised State governments to use lockdown as last measure. However, many states have announced varied degrees of restriction on movement of people depending on the severity of the situation in their region. This is expected to impact the economy in this quarter and there have been downgrades to India’s growth in FY22 by upto 1%. Central government has also relaxed norms for vaccination by allowing vaccination for all above the age of 18 from 1st May and increasing the supply of vaccines by permitting import and providing financial aid to local manufacturers. The pace of vaccination will be crucial for quicker normalisation of economic activity. The corporate have started announcing results for the March quarter and there are no major disappointments so far. Consensus is expecting sharp increase in net profit due to the Covid-led disruption in the base quarter. It will be important to observe comments of Banking and domestic consumer oriented companies about impact of recent surge in covid infection on their business. Nifty is trading at 21 times 1 year forward EPS, which is close to all time high. Hence upside from valuation rerating is limited and one needs to watch if there are any earnings downgrade due to emerging Covid situation. “