Investors Fear Market Fallout Of State Lockdowns To Fight Covid

Investors are bracing for market fallout as state after state locks itself down in India to contain the spread of the coronavirus as infections and deaths surge.

Investors are bracing for market fallout as state after state locks itself down in India to contain the spread of the coronavirus as infections and deaths surge. More than two thirds of states are shut if assessed by their contribution to national output, analysts at Jefferies calculated last week. Tamil Nadu, which houses foreign manufacturers including BMW and Dell, will also close from Monday, while Delhi extended its lockdown for another week. The measures come as pressure builds on Prime Minister Narendra Modi to impose strict nationwide curbs as he did last year. All of that is forcing a reassessment among investors who had hoped that less-severe curbs would soften the blow to economic growth. Earlier in May, India's central bank assured markets that it expects the dent in aggregate demand to be moderate in comparison with a year ago, with "containment measures being localized and targeted." The news of strict lockdowns in several states may hurt sentiment ahead, Ajit Mishra, vice president for research at Religare Broking Ltd., wrote in a report. Investors will be watching key macroeconomic data including inflation and factory output this week as well as the vaccine drive, he said.