India's recovery momentum gained pace in December: Nomura

The latest uptick came on the back of a recovery in Google’s workplace mobility index even as retail and recreation mobility and Apple’s driving index declined from their previous week’s levels, Nomura said.

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“Key risks that could derail this path include potential local resurgence in virus cases, ebbing pent-up demand, weaker global growth and a latent fiscal drag from ongoing expenditure compression,” Nomura said.
The pace of India’s recovery accelerated further during the first week of December, reflecting ‘residual’ festive mobility and demand, according to brokerage firm Nomura.

The Nomura India Business Resumption Index (NIBRI) gathered pace at 89.1 for the week ended December 6, after recording a mild fall in the last week of November, which saw the index being revised down to 88.4 from 89.2, the firm said in a note on Tuesday.

Overall, the business activity tracker continued to follow the November trend at 11 percentage points (pp) below pre-pandemic levels, the note said.


“This suggests that growth has accelerated further in Q4 (Q3FY21), after a solid sequential normalisation in Q3 (Q2FY21),” said Nomura economists Sonal Varma and Aurodeep Nandi in the note.

In its previous note, the Japanese brokerage had said business activity in November showed gains over the previous month with the NIBRI picking up 4.6pp over a 2.1pp improvement in October.

The latest uptick came on the back of a recovery in Google’s workplace mobility index even as retail and recreation mobility and Apple’s driving index declined from their previous week’s levels, Nomura said.
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India’s labour participation rate continued to inch up to 41.9% over the week, from 41.1% a week earlier, it said.

On the other hand, power demand recorded a mild 0.4% contraction against 1.5% growth seen in the previous week, the note said.

However, Nomura highlighted certain key risks that could dampen the overall recovery trend.

“Key risks that could derail this path include potential local resurgence in virus cases, ebbing pent-up demand, weaker global growth and a latent fiscal drag from ongoing expenditure compression,” it said.
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The sustained improvements in leading indicators during the third quarter along with official data showing a sharply moderated 7.5% GDP contraction in the second quarter had prompted the firm to raise its FY21 GDP forecast to -8.2% from -10.8% earlier.
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