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Current Slowdown, Most Severe One in Last 20 Years

In our study of the "downturns" in the last 20 years, the current slowdown seems to be the most protracted and severe both in terms of time and its spread

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Slowdown, Brokerage, Firm
The report said that the slowdown has been on account "of 3 successive shocks in 3 years in the form of demonetisation, rolling out of GST in not so phased manner coupled with the blowout of NBFC crisis". Pixabay

The current slowdown has been the most severe one in the last 20 years said a Centrum brokerage firm report, adding that its impact has been “unprecedented” on both rural and urban demand. It forecast growth rebound only by first or second quarter of 2021

While all the past three downturns have been either due to exposure of heightened external vulnerabilities or natural calamities, Centrum claimed, the ongoing slowdown seems to be “self inflicted”.

The report said that the slowdown has been on account “of 3 successive shocks in 3 years in the form of demonetisation, rolling out of GST in not so phased manner coupled with the blowout of NBFC crisis”.

In our study of the “downturns” in the last 20 years, the current slowdown seems to be the most protracted and severe both in terms of time and its spread. The impact on both rural and urban demand has been unprecedented,” the report said.

Slowdown, Brokerage, Firm
While all the past three downturns have been either due to exposure of heightened external vulnerabilities or natural calamities, Centrum claimed, the ongoing slowdown seems to be “self inflicted”. Pixabay

Further it was noted that no downturn has reversed without the government intervention hence the September quarter of FY2020 may be the bottom and “we expect growth to rebound to normalized levels in Q1FY21-Q2FY21”.

However the report also said that “though the worst seems to be behind us, this is going to be a slow ride towards path of normalization”.

Centrum advised investors to move away from defensive portfolio and increase weightage to rate cyclicals like corporate banks, Auto etc.

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“Therefore, we are underweight in both IT and Metals, neutral in Pharma and Telecom. Our top picks are a mix of value and rate cyclicals: SBI, L&T, Bajaj Auto, RNAM, Bajaj Consumer and NCC,” the report added. (IANS)

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Consumer Sentiments Appear Weak and Slowdown Persists though Growth Not “Falling Off Cliff”

On the consumer market, it said the distribution is undergoing a change and 'kiranas' are here to stay and they are getting a strong foothold

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Consumer, Slowdown, Growth
"Consumer sentiments appear weak and slowdown persists but growth does not seem to be falling off a cliff," the broking house said in a note. Pixabay

Broking firm HSBC Securities on Thursday said consumer sentiments appear weak and the slowdown persists though growth is not “falling off a cliff”.

“Consumer sentiments appear weak and slowdown persists but growth does not seem to be falling off a cliff,” the broking house said in a note.

On the consumer market, it said the distribution is undergoing a change and ‘kiranas’ are here to stay and they are getting a strong foothold.

Finance Minister Nirmala Sitharaman a day ago in Chennai said though GDP growth has declined to five per cent in the first quarter, ups and down are part of the growth process and the government is responding to the current economic challenges to revive demand and consumption in the country.

Consumer, Slowdown, Growth
Broking firm HSBC Securities on Thursday said consumer sentiments appear weak and the slowdown persists though growth is not “falling off a cliff”. Pixabay

She said the “millennial mindset” of relying on taxi services, besides the upcoming stricter emission norms, are responsible for the auto sector slowdown.

The macro state of economy is such that the muted household spending as reflected in metrics like falling car sales have resulted in unsold inventories. Rising unused capacities in factory plants have shown slackening demand and feeble investment.

Automobile sellers have not been reporting brisk activity, implying lower spending ability and flat income growth. Hundreds of showrooms have shut shop.

Tractor and motorcycle sales – indicators of rural demand – continued to contract.

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Commercial vehicle sales slowed even after adjusting for base effects, beaten by low demand.

Construction activity indicators have also slowed down, with contraction in cement production and slower growth in finished steel consumption in June. (IANS)