Higher prices means higher-demand or lower supply due to disruption, caused by the COV19... that would benefit business, earnings would go up... Though, it would be followed by higher supply and lower prices as the lock-down ends... Both demand and supply would go up... Higher demand would increase prices and supply and the economic growth...
Lower supply would increase prices and expectations and margins and earnings and expectations, it would be like the lower oil supply and higher prices, though the expectation is that prices would go down after the lockdown... People are spending more for the same basket of goods during the lockdown...
INDIA is proved much resilient as far as the pandemic is concerned... Patients must be localised and those having symptoms must be brought to the center with specialised treatment with other patients for the ease of treatment after testing... This would help ease the red zones to the orange and green zones to increase economic activity and production... After three rounds of lockdown everybody must be able to know about the virus and symptoms by now...
The rate of doubling of patients has increased from 5 days to 10 days... INDIA has been most successful in controlling the spread and has a high cure rate and low death rate... The economy may see the foreign capital inflows.... INDIA is much cheaper and safer as compared to the other countries, in both the short and long term...
Increase money in the economy to increase production/productivity or increase supply to lower prices and increase real wages, real interest and real exchange rate demand and price expectations and spending... Lower borrowing cost would have the same effect, increase real wages and real exchange rate and demand and spending and prices and growth expectations...
Delay in stimulus, widely expected would delay spending, especially the investment spending and could prolong slowdown... More money would increase demand and employment and supply and investment and production and growth in the economy... Productivity and employment increasing Fiscal spending is warranted when there is also a need to increase transmission of lower price to the consumers to increase real balances with the public and demand and spending...
More money is needed to increase employment and demand and growth in the economy... There been oversupply in the economy due to low demand and prices... Price correction with stimulus or more money to the public would help increase demand and growth...
Any stimulus would work only when the shutdown is over and production and supply are increased... Unemployment benefit DBT could increase demand without increasing real economic activity which is locked-down, except agriculture and the stock market, that could increase prices and expectations...
A direct unemployment benefit transfer to maintain demand could be effective in sustaining the loss in employment and low growth.... It is true that INDIA is a Rs 200 trillion economy a deficit spending of Rs 3-4 trillion could give the necessary boost... Just 2% of the GDP...
This is high time when the govt shall introduce land, labour, capital, electricity and fuel reforms to increase productivity and competitiveness of the INDIAN economy... Higher productivity and lower prices would increase employment-investment and demand-supply and growth...
The Gov could float Corona dollar denominated bonds overseas and hedge the foreign exchange risk through derivatives... It would increase supply of dollar and lower demand for foreign exchange could make the rupee strong and lower inflation and interest rate and attract foreign capital inflows...
Growth increases employment, the best insurance against poverty... INDIA's needs spending on the social security, healthcare, education and unemployment benefits... Like the rich countries... Though, growth is likely to recover fast after the lockdown... Low growth is followed by high growth and higher growth by low growth...
Gov must make it a punishable law for patients and people with symptoms to stay at home or hospitals... Purchase of food items has never been suspended, but only manufactured products which create alot of jobs, wages and demand, which seems nonsensical and could hurt growth, along with workplaces... China was as badly affected by the virus as nobody else, but it lifted lockdown in a phased manner...
Shops must be properly sanitised and consumers must be allowed purchase so that demand and jobs are not hurt... The death rate in INDIA is very-very low and more people die in road accidents daily... Spending and demand for manufactured has suffered most... Demand stimulus without production and supply could increase price expectations... Strict law in place for movement of goods and people could avert the spread and get growth back to normal... Awareness could help avoid the virus... Patients must be localised to hamper the infection...
Relaxations in green and orange zones is good for business... INDIA's low death rate and high cure rate are quite encouraging... Gradually, economy could increase its pace of growth... TB vaccines have saved INDIA's from mass spread of the epidemic... It has flared alot resilient compared to other nations as far as the pandemic is concerned...
Several vaccines and medicines are in the offing boosting stocks following the Japanese stocks and US, too... INDIA is in the sameline...After the correction it has been observed that it is now normal for the Sensex to increase 1000-1500 points... in a day...
Market-Capitalisation to GDP ratio is an other tool to gauge the earning expectations and the underlying value of the stock market and the potential for the prices... INDIA's Market-Cap to GDP ratio is quite low compared to 2010 after the 08 recession and the monetary and fiscal stimuli and growth touched double digits... Though, later it increased overheating in the Economy... because of the weak supply side management (mismanagement)...
P/B ratio below 3 tells that a stock is cheap and not P/E ratio which tells about the expectations about the price...
Even at 1% INDIA's growth rate would be highest/fastest... S&P has opined that INDIA needs a big stimulus to get the growth bounce back and has backed relaxation in the fiscal deficit and debt... which could improve ratings...
INDIA has alot of potential if supply becomes demand and prices or inflation stabilising at full employment... by spending on increasing productivity... More spending on the education, skills and innovation (ESI) and productivity and competitiveness... It has been observed that in the long run higher productivity and lower population would help contain demand and prices and growth....
Lower prices would make people rich when the world is aging with smaller population... the value of money would increase demand and growth when population is going down... There is a difference in prices in the economy and prices in the stock market when the former is managed actively through money and the latter are rarely managed and demand and supply purely decide the level of prices based on price expectations... Nonetheless, the central bank is responsible for price stability in the economy, but not as such in the stock market, but depends on the broader economy...
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