India’s COVID cases set for new highs

India’s COVID cases set for new highs

India’s daily COVID-19 cases have jumped to 117,100, a five-fold increase in a week and on course to overtake its previous infection peak as the fast-spreading Omicron variant replaces Delta in cities.

Government officials have privately said they are working under the assumption that daily infections will surpass the record of more than 414,000 set in May, given what has happened in countries such as the United States where daily cases recently rose past 1 million.

“We will clearly surpass our record shortly and reach a new peak by early February,” M.D. Gupte, a former director of the state-run National Institute of Epidemiology and an immunisation adviser to the government, told Reuters.

“Given the size of our population, we will report more daily cases than the US. But what we have seen is that these cases are much more mild, so the need for hospitalisation and oxygen and all that is not picking up.”

He said India’s high rate of infection during a previous major wave in April and May, as well as vaccinations, would mean a reduction in the severity of the illness for those infected by the Omicron variant.

Nearly 70 per cent of Indians had been exposed to the coronavirus by the middle of last year, while an almost equal proportion of adults have been fully vaccinated as of this week.

Health officials in the capital, New Delhi, and the state of Maharashtra, home to the city of Mumbai, which together account for the bulk of new cases, have said hospitals and testing infrastructure have yet to come under pressure as many people are recovering quickly at home.

In Mumbai, about a quarter of all tests are positive but fewer than a fifth of those who have contracted the virus have needed hospitalisation, Maharashtra Health Minister Rajesh Tope told reporters.

The city recorded 20,181 new infections on Thursday, well above its previous high of just over 11,000 set last year.

“Around 80 per cent of the hospital beds are still empty,” he said.

“Oxygen demand is not rising in proportion to the rising cases. Right now, there is no plan to impose a lockdown. If required, we may increase restrictions.”

The state has closed schools and colleges and limited the number of people allowed in cinemas, at weddings and other functions.

Delhi, where daily cases have risen by more than five times in a week, goes into a 55-hour lockdown from Friday night to Monday morning.

Authorities have also imposed a night curfew on weekdays, closed schools, and ordered most shops to open only on alternate days when there is no curfew.

India’s COVID-19 deaths rose by 302 on Friday, taking the total to 483,178. Total infections stand at 35.23 million, only fewer that the US tally of about 58 million.

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New-age firms make it to Amfi’s large-cap list

New-age firms make it to Amfi’s large-cap list

Start-ups Zomato, PB Fintech, One97 Communications, and FSN E-Commerce Ventures have entered the large-cap category after the latest reclassification exercise by the Association of Mutual funds in India (Amfi).

Large cap

This comes despite stocks such as PB Fintech (Policybazaar) and One 97 Communication (Paytm) trading below their issue price.

Others such as Mindtree, SRF, IRCTC, Tata Power, JSW Energy have been moved from mid-cap to large-cap category.


Stocks that have been promoted to large-cap have done exceedingly well in the last one year and have generated returns in the 110-190 per cent range.

Market participants say the inclusion of these stocks into the large-cap category makes them more appealing to the equity fund managers.

Currently, fund managers are permitted to invest up to 10 per cent of the scheme corpus in a single stock irrespective of its performance.

Meanwhile, companies such as Bandhan Bank, Bank of Baroda, Biocon, and NMDC have been moved from the large-cap category to mid-cap category.

These changes will be applicable from the February-July 2022 period.

While newly-listed companies like Star Health and Allied Insurance, Aditya Birla Sun Life AMC, Devyani International have entered the mid-cap category.

Edelweiss in its note said that the market capitalisation cut-off for large-caps is Rs 47,600 crore, whereas for mid-caps it is Rs 16,200 crore.

“Of the total market cap, large-cap stocks (top 100) account for 68.8 per cent vs 71.4 per cent (July Review).

“Mid-cap stocks (101- 250) account for 16.9 per cent vs 16.27 per cent (July Review).

“Small-cap stocks (251 and below) account for 14.3 per cent vs 12.29 per cent (July Review).

The percentage share of small-cap stocks have increased by almost 2 per cent as it is led by price outperformance in small-cap stocks and also 32 of the recently listed IPOs have got featured in small-cap category,” said Edelweiss.

Stocks such as Central Bank of India, Gujarat Fluorochemicals, Happiest Mind Technologies are some that have been moved from the small-cap to mid-cap segment.

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NSW forges ahead with school return plan

NSW forges ahead with school return plan

NSW is forging ahead with its plan to return children to classrooms for the start of term one, before primary school aged students can be fully vaccinated amid the escalating COVID-19 outbreak.

Students, teachers and parents are hoping to leave behind the pandemic disruptions that plagued the last year of schooling in NSW when the first day of classes for 2022 begins on February 1.

While just over 78 per cent of children aged 12 to 15 in NSW have been fully vaccinated, primary school aged children – those between five and 11 – will only become eligible for their first dose on Monday, January 10.

With a three week gap recommended between jabs, very few will be fully vaccinated when classrooms open their doors amid the nation’s biggest outbreak.

The Queensland government has announced it will delay the return to classrooms by two to three weeks if case numbers in the state are still peaking.

“I’ve got sisters who’ve got young children, they’re concerned and they want to make sure that their kids are vaccinated before returning to school,” Premier Annastacia Palaszczuk told reporters on Friday.

But NSW Premier Dominic Perrottet has said he is determined the term will begin as planned.

“Our commitment is to get kids back in the classroom day one, term one,” he told reporters on Friday.

The health and education teams are finalising the plan to keep children safe when that happens, he said, with measures such as daily rapid COVID-19 testing being considered.

At a national cabinet meeting earlier this week a team was tasked with developing a country-wide framework to enable students to return to school as scheduled, and for schools to stay open with consistent requirements across all jurisdictions.

“I think it would be best to have a national approach and that’s the plan going into national cabinet,” Mr Perrottet said.

“But otherwise, we’ll take our approach.

“Clearly different states will be going through different surges at different points in time, and you might require different settings.”

There are also concerns the highly contagious Omicron variant could see scores of teachers diagnosed with or exposed to the virus, triggering staffing shortages.

“Just like the health system … that will be an issue,” Mr Perrottet said.

“(But) I’m very confident with the plans that I went through yesterday with our department of education.

“We are preparing for that challenge.”

In the meantime, NSW Chief Health Officer Kerry Chant urged parents to get their children vaccinated.

“A big call out to those 12 to 15 year olds … I get very depressed when I see that number (the vaccination rate) sticking at 81.4 per cent for first dose,” she said.

“I’d love to see that number come up a little bit higher before school.”

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As demand for digitisation rises, tech funds give one-year returns of 63%

As demand for digitisation rises, tech funds give one-year returns of 63%

Strong performance by technology (tech) stocks in the current year has led to superior returns in information technology (IT) sector funds.

On average, tech funds have given returns of 63.53 per cent in the past one year, the highest among all categories of funds, reveals the data from Value Research.

Market participants say that Covid-19 has accelerated the growth of IT companies with rise in demand for digitisation.


This trend may continue for the next two to three years as more and more companies go digital.

In the past one year, several IT funds have given returns in the range of 41-77 per cent.

Tata Digital India Fund has given the highest returns of 77.31 per cent in the category, followed by ICICI Prudential Technology Fund and Aditya Birla Sun Life Digital India Fund.

The returns are of direct plans.

“The rally in equity markets has been well-diversified, with sector rotation in play in the past few months, except for IT funds.

“IT funds have been consistent outperformers in the past two to three years as growth outlook improved for the sector in the post-Covid world, resulting in valuation rerating of most stocks,” said ICICI Direct in its research note.

Stocks such as Infosys, Tata Consultancy Services, Tech Mahindra (TechM), and HCL Technologies have been the top holdings of the few IT funds.

In the past one year, the stock of Infosys has given returns of 52.22 per cent, while TechM is up nearly 90.7 per cent.

On the other hand, large-cap funds have given average returns of 26.58 per cent in the past one year.

The average returns generated by IT funds are strong, even for a long-time horizon.

In the five- and 10-year period, the average returns of IT funds have been 31.73 per cent and 22.94 per cent, respectively, shows the data from Value Research.

“We have seen huge spending in the IT sector since the start of the pandemic.

“That is the reason for the outperformance of stocks in the tech sector.

“The shift towards digital first will be a key growth driver in the years to come,” said a fund manager of a leading fund house.

Photograph: Vivek Prakash/Reuters

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Jigar Shah: ‘Large-caps, especially with a value bias, are preferable at this stage’

Jigar Shah: ‘Large-caps, especially with a value bias, are preferable at this stage’

‘If the third wave of Covid infections is as bad as the second one, the market may get very polarised with a preference for blue-chips with low volatility.’

“,” Jigar Shah, CEO, Kim Eng Securities India, tells Puneet Wadhwa/Business Standard.


With the US Fed stance now clear, how do you see global financial markets playing out over the next year?

The US Fed policy action would be replicated by all other central banks, sooner or later.

The signs of liquidity tightening and rate increase are palpable.

Earnings forecasts are not fully pricing in the risk from higher interest rates and continued commodity price inflation.

The wage inflation is catching up, too, which may build pressure on earnings across sectors, especially the service sector, which forms a bigger slice of the economy in India.

How do you see the Indian markets doing over the next 12 months?

Our Nifty50 target is 14,700, based on a one-year forward P/E ratio of 20x, a 10 per cent premium over the long-term average.

Broad-based earnings growth could be challenging.

There is a risk in both earnings disappointment and P/E derating.

If the third wave of Covid infections is as bad as the second one, the market may get very polarised with a preference for blue-chips with low volatility.

There are, however, many bottom-up opportunities and themes to consider for the long term.

Do you see stock returns getting more polarised?

Amid several uncertainties, equity flows would preferably get parked into sectors with stronger consistency and quality of earnings or specific catalysts/tailwinds.

We continue to prefer IT services, telecom and telecom ancillaries, tractors, pharmaceutical/health care, and consumer businesses.

Businesses with a specific focus and superior strategy on sustainability/ESG can witness growing investor interest and allocations (both local and global).

Areas such as renewables, recycling, circular economy, green hydrogen, decarbonisation, and energy efficiency are likely to grow faster and companies championing these themes with innovative products/services will deliver superior growth.

Will the large-cap universe be a safer option now?

As extra liquidity in the market reduces, small-caps below $500 million in size can see some derating.

Many stocks of firms in the $200 million to $2 billion range have undergone sharp correction from their highs, but there is more scope in case of an earnings disappointment.

Select small and mid-caps with high quality of governance, earnings, and no controversies can find a place in institutional portfolios.

Large-caps, especially those with a value bias, are preferable at this stage.

There is a lot of expectation built in that India can be included in major bond indices in 2022. Do you see this materialising?

This is anticipated for quite some time and is perhaps delayed owing to the pandemic.

If India is included in the global bond index, inflows could be $20 billion-$25 billion annually.

However, bond investors will require a well-controlled fiscal deficit, low inflation, and stable currency.

These factors remain dynamic, but inclusion in the global bond index will certainly be a positive and instil good overall discipline.

Are valuations and economic progress enticing enough for foreign investors to prefer India over other emerging markets?

As of now, we are witnessing significant outflows on the lines of other EMs, but India has always been a favourite of foreign investors due to: a. Size of the market and its potential growth; b. Variety of stocks/sectors to choose from; c. Several high-quality management with a track record of delivering solid financial performance and value creation.

Foreign inflows could be lumpy and big once the threat of the third wave is over and the path for economy/earnings recovery is clearer.

Can retail investors’s enthusiasm for the markets continue at the same pace in 2022?

The retail investor boom was driven by the ease of technology and work from home during the pandemic.

This coincided well with ‘easy liquidity’ and ‘easy returns’ in the past 12-15 months.

It has been across asset classes, including cryptos and commodity trading.

Retail investors’ participation in 2022 could slow down a bit as easy liquidity-driven ‘easy money’ trade is less likely to repeat, reducing the activity of short-term traders and speculators.

Historically, the peak of bull markets attracted maximum investors and funds, and vice versa.

How do you see India Inc’s earnings shape up?

The consensus earnings growth forecast is around 20 per cent for the next year and appears a challenging task.

Downgrades may happen because there will be pressure from continued high commodity prices, wage inflation, and rising interest rates.

All these could be passed on only with a lag.

Additional trouble could come if the third wave (of Covid) materialises, slowing the credit growth and economic recovery and affecting asset quality.

Feature Presentation: Aslam Hunani/

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Why unicorns are investing in startups

Why unicorns are investing in startups

Byju’s, Flipkart, PharmEasy and CRED, among others, have taken the acquisition route to grow, reports Shivani Shinde.

Even as startups in India continue to attract investors and take their valuations higher, several unicorns are now becoming strategic investors themselves and picking up stakes in smaller companies.

In 2021 restaurant aggregator and food delivery company Zomato led the pack by investing in five startups, including Curefit, Grofers, Shiprocket and Magicpin.


The other player that has been buying minority stakes in smaller startups is Rebel Foods, a cloud kitchen company.

It has invested in four startups, including Goodness Beverages, FoodyBuddy and Zomoz.

Explaining his rationale for picking up strategic stakes in smaller startups, Deepinder Goyal, founder of Zomato, wrote in a blog recently that while food delivery and dining out remains at the core of Zomato, investing in building the ecosystem that complements this business is also his focus.

“We want to take an investment route to building these businesses instead of building them in-house. This strategy is inspired by the likes of Alibaba and Tencent, where they invested behind the ecosystem at large, created multiple M&A options for themselves, and in the worst case of M&A not panning out, realised windfall financial gains from their investments in market leaders across different categories,” wrote Goyal.

Photograph: Rupak De Chowdhuri/Reuters

Zomato shut down its D2C (direct to consumer) business Nutraceuticals and chose to back Shiprocket, which offers logistics solutions.

Similarly, Fitso was sold to Curefit and in turn, Zomato also invested in Curefit.

Earlier this month, Rebel Foods had stated that it would invest $150 million in strategic brand investments and acquisitions in India and abroad.

“Investing for a minority stake in other startups can unfold serious synergies, especially when it comes to cross-selling and customer acquisition. Companies like Zomato, Swiggy, etc. can afford to compromise short-term RoI (return on investment) goals to build an ecosystem that supports their long-term growth plans,” explained Ankur Bansal, co-founder and director, BlackSoil.

He added: “Acquiring a minority stake seems to be a prudent step on the part of these companies. They seem to be planning on investing additional capital once the businesses of their investments scale and grow and there is incontrovertible proof of synergies. While it is too soon to tell how this inorganic growth strategy will pan out, they have approached these investments more as partnerships as opposed to buying out the competition.”

However, unicorns are not only acquiring minority stakes in startups — they are also aggressively pursuing merger and acquisition opportunities.

Byju’s, Flipkart, PharmEasy and CRED, among others, have taken the acquisition route to grow.

In fact, the number of unicorns acquiring majority stakes or buyouts have gone up significantly.

The value of such acquisitions hit $1.27 billion in 2021 (year-to-date) across 45 deals, much higher than $640 million in 2020 and $111 million in 2019.

Anup Jain, managing partner, Orios Venture Partners, which has invested in startups such as PharmEasy, Zostel, Zupee, among others, said: “The trend of bigger, more mature market-leading startups investing in smaller startups has a two-fold strategy. One, maintain dominance by identifying newer adjacent companies with promising talent which could become a threat in the future, and two, increase their own valuations through inorganic growth.”

According to recent news reports, food delivery startup Swiggy, too, is looking to invest in Rapido, as it allows the food-tech firm to strengthen its logistics capabilities.

As for Zomato, it is planning to deploy $1 billion over the next 1-2 years in such opportunities.

“Our business today is at the confluence of food and hyperlocal e-commerce. What powers our business is the last-mile hyperlocal delivery fleet, which is now 300,000+ delivery partners strong on a monthly active basis. We are bullish about the various use cases that we can plug our delivery fleet into, and we think we can be the primary contenders for building large businesses in hyperlocal e-commerce in India,” Goyal wrote.

Feature Presentation: Rajesh Alva/

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What will cost India Rs 4 trn?

What will cost India Rs 4 trn?

The government’s food subsidy in the ongoing fiscal year is expected to be a little less than Rs 4 trillion.

IMAGE: Women collect rations from a government depot in Rajasthan. Photograph: PTI Photo


Just weeks before the Budget, Food Secretary Sudhanshu Pandey said v.

Addressing reporters in New Delhi, the food secretary said around Rs 2.25 trillion subsidy is estimated for procurement and distribution of food grains under the National Food Security Act (NFSA), while an additional Rs 1.47 trillion has been incurred for implementing the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY).

The Budget Estimate for food subsidy in FY22 is around Rs 2.43 trillion, according to Budget papers.

For FY21, the Revised Estimate for food subsidy was around Rs 4.23 trillion.

However, the Centre pumped in some more funds to clear all dues by the time the year ended.

Under NFSA, the Centre gives highly subsidised food grains at Rs 1-Rs 3 per kg to over 810 million people through the public distribution system .

Over that, the government has been supplying free food grains to NFSA beneficiaries during the pandemic under the PMGKAY.

This scheme is valid till March 2022.

During FY21, the government’s food subsidy was Rs 5.29 trillion, another food ministry official said.

Food Corporation of India Chairman Atish Chandra said FCI has engaged an independent agency to do third-party assessment of all procurement and storage operations for wheat and rice, and also plans to eliminate all non-scientific storage for grains by March 2022.

“We can assure that very soon there won’t be any long-term storage of grains,” Chandra said.

On FCI’s assets monetisation plans, the chairman said around 1.96 million tonnes of conventional depots and 0.8 million tonnes of silos can be constructed in vacant FCI land.

Meanwhile, the food secretary said there had been a 62 per cent growth in ethanol blending in the current calendar year.

Ethanol blending with petrol increased from 5.0 per cent to 8.1 per cent in one year, the highest ever, he said.

Under the ‘One Nation, One Ration Card’ (ONORC) programme, over 500 million portable transactions have been recorded, delivering more than Rs 33,000 crore (Rs 330 billion) subsidy on food grains.

“During the pandemic period alone, over 430 million transactions have happened with delivered food subsidies of Rs 29,000 crore (Rs 290 billion),” he said.

“Delhi, which started very late, is registering one of the highest numbers of inter-state portable transactions through ONORC,” he said.

On the issue of rising edible oil prices in India, Pandey said that following the government’s intervention prices were cooling off consistently, and a further drop was expected with the arrival of a better mustard crop from the rabi season.

On other essential food commodities, he said retail prices of rice and wheat were “very stable”, while prices of pulses have stabilised and vegetables, especially onion, potato and tomato, have eased.

Pandey added that the Centre was in the final stages of developing a system to capture the data of the homeless who do not have ration cards, so that subsidised foodgrains could be given.

“States have been told to expedite the process of identification so that 16 million eligible people under NFSA are not left out.”

Since the homeless and the destitute have no ration card in the absence of an identity card or residential address, they are not covered under either NFSA or PMGKAY.

“States have been told to expedite the process of identification, so that 1.6 crore eligible people under NFSA are not left out,” Pandey said.

Another food ministry official said states have lifted 1.121 million tonnes of foodgrain in the current fiscal year for distribution to people not covered under the NFSA.

State governments purchased over 1.1 million tonnes of foodgrain under the Centre’s open market sale scheme in 2021-2022, he said.

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T C A Srinivasa-Raghavan: Sitharaman and Das: Like Dhoni and Jadeja

T C A Srinivasa-Raghavan: Sitharaman and Das: Like Dhoni and Jadeja

When it comes to running between the wickets — which is exactly what an FM and a governor do — Jadeja always defers to Dhoni’s larger judgement of the situation and the needs of the team, observes T C A Srinivasa-Raghavan.

IMAGE: Finance Minister Nirmala Sitharaman and Reserve Bank of India Governor Shaktikanta Das. Photograph: ANI Photo


The incumbent governor of the Reserve Bank of India, Shaktikanta Das, has completed three years in office and has been asked to continue for two more years.

The Union finance minister, Nirmala Sitharaman, has been in office for two-and-a-half years.

Two of the years they have worked together have been spent fighting Covid.

The first thing that strikes an observer is how conflict-free the relationship has been.

Two of the previous three governors had sought to assert their own ‘independence’ as being a matter of institutional importance.

Or at least that’s the impression they gave.

Mr Das has avoided that temptation, especially of making impromptu remarks to the media and grandstanding elsewhere.

Mr Das, in fact, has treated the relationship between his office and that of the finance minister exactly as Ravindra Jadeja does with M S Dhoni.

When it comes to running between the wickets — which is exactly what an FM and a governor do — Jadeja always defers to Dhoni’s larger judgement of the situation and the needs of the team.

And when you run, run hard.

As a result, Ms Sitharaman and Mr Das have revived an old template for future relationships between finance ministers and governors.

This is most welcome because somehow between 2011 and the end of 2018, the governors had forgotten who, under Indian law, is the senior partner at the crease.

Other governors, too, have had their differences. But it’s all been behind the scenes.

The details have emerged long after they demitted office. The two autobiographies by Y V Reddy and D Subbarao give us a flavour of the prickly relationship.

Economists, yes; parachutes, no

Mr Das has proved another thing which is important for future appointments.

This is that it is a mistake to appoint an economist from outside the government as governor, especially one that is parachuted in from abroad.

Economics, actually, is neither necessary nor sufficient for the job to be done satisfactorily.

None of the governors before I G Patel in 1977 was an economist. All but two were ICS men.

Being an economist might be desirable but parachuting one in certainly isn’t.

Indeed every single economist governor till 2013 had been part of the government for a long time before being appointed to the job.

This tempered their understanding of the term ‘central bank independence’.

It’s foolish to think he (but sadly not yet a ‘she’) can be independent of the authority that appointed him.

The degree of independence is, after all, defined by the appointer, not the appointee.

The best finance ministers in the last 30 years like Manmohan Singh, Yashwant Sinha, and now Ms Sitharaman, tread softly with a pin in their hands.

The best governors stick to their knitting.

C Rangarajan’s is a great example to follow, not only because he spearheaded the 1993-1997 financial sectors reforms — the only ones that were there by way of reforms.

Simply put, when governors are assigned a task, they are expected to complete it quietly.

In that respect Mr Das has proved invaluable, both in terms of reforms and silence.

He has worked hard and without flamboyance.

And that’s why his degree of trusted independence is currently more than that of any other governor since Bimal Jalan.

Ministerial micro management is at a minimum.

Of course, he would have been asked to look the other way occasionally.

That, too, goes with the job. Do it quietly under private protest.

Takes two to clap

But — and this is a big but — the minister matters, too.

In fact, ministerial temperament is critical in defining the relationship.

One finance minister once told me with great bitterness as to how it was he who was answerable to the country via parliament and not the governor.

Another called his governor arrogant. One nearly forced a governor to resign. There are many instances.

It is also a matter of record that Tamil finance ministers — T T Krishnamachari, C Subramaniam, P Chidambaram — mostly had a very fractious relationship with their governors.

In that one respect, at least, Ms Sitharaman has disappointed us so far.

At the heart of the relationship lies not just trust between the two and the absence or reining in egos — what a former deputy governor of the Bank of England, Paul Tucker, has called ‘unelected power’.

His book of that name is an absolute masterpiece even if somewhat difficult to plough through.

Believe me, if you are a serious student of central banks, it’s worth spending a month on it because not since Montagu Norman in the inter-war years have central bank heads wielded as much power as they do now.

Norman could topple governments.

Mr Das may, therefore, murmur occasionally that he is ‘astonished at his own moderation’.

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