Acuité expects AMEP index to improve in Mar-22, given the ramp-up in economic activities

While the third Covid wave was short lived in India and was followed by a rapid removal of mobility restrictions in most parts of the country, the performance of certain economic indicators didn't witness a commensurate pickup Feb-22 as compared to Jan-22. This led to the AMEP (Acuité Macroeconomic Performance) index declining marginally by 0.5% MoM to 111.8 in Feb-22 from 112.4 in Jan-22. The sequential moderation needs to be seen, however also in the context of a lower number of working days in the month of February. Notably, with relatively lower severity of Omicron wave backed by the healthy vaccination coverage, the index on annualized basis expanded by 2.3% YoY in Feb-22 from 0.7% in Jan-22.

Looking at the internals for Feb-22, the breadth of recovery slightly improved with 8 out of 16 indicators covered by the AMEP index recording a sequential improvement compared to 6 in the previous month. However, a moderation in rail freight, auto sales, e-way bills, GST collections and power generation more than offset gains recorded in the other indicators such as passenger traffic, import demand, petrol and diesel consumption.

Acuité expects the index to improve in Mar-22, given the ramp-up in economic activities particularly in contact intensive services and government spending due to year-end seasonality. This has started to partially reflect in certain high-frequency weekly indicators such as power consumption, e-way bills, and google mobility index which have shown signs of improvement in the first two weeks of Mar-22. Mobility around retail and recreation activity, grocery and pharmacies, parks, workplaces, and transit stations have been currently trailing above their respective pre-pandemic levels.

Link to the report

Source : Equity Bulls

Keywords

AMEPIndex Economy AcuiteRatings