The Indian stock market attracts millions of investors annually. These investors are primarily driven by institutional money. Both FIIs as well as DIIs constitute the major part of liquidity in the stock markets. Therefore the effective tracking of their inflows and outflows are helpful in forecasting the broader trends in the markets. FIIs are believed to have a greater influence on the domestic markets along with the sustained flows from DIIs (Dhanorker, 2020). The countries which constitute a major portion of FII inflows into India are listed below. 

The performance of FIIs and DIIs have been carefully traced to meet the expectations of the investors during the month of January 2021. One of the primary reasons behind this is that the year 2021 will mark the arrival of the COVID-19 vaccine followed by the economic recovery that will see Indian government taking stimulus measures to cope with the weak performance of Indian economy during the COVID-19 pandemic. So it becomes utmost important to keep a track of previous FII and DII trading activities. 

The above table shows the trading activities of FIIs and DIIs from November 2020 to January 2021. There has been a continuous decline in the gross purchase of FII from Rs. 260 crores (approximately) in November 2020 to Rs. 168 crores (approximately) in January 2021. The gross sales of FII also declined from Rs 194 crores (approximately) in November 2020  to Rs. 160 crores (approximately) in January 2021. This decline was sharp for the month of  November and December because of the speculations surrounding the foreign investors due to the outbreak of COVID-19 which ultimately registered a steep decline in the net purchase/sales for the FIIs. 

While FIIs were registering a decline in their performance, DIIs, on the other hand, showed an impressive improvement in their performance as their gross purchases increased threefold from Rs. 71 crores (approximately) in November 2020 to Rs. 105 crores (approximately) in January 2021. Due to the restrictions on the movement across the borders and closing of the economies worldwide, the domestic investors started putting their money in the Indian stock market as a result of which the gross purchase increased. The gross sales had increased from November 2020 to December 2020 but reduced during January 2021. This is primarily due to the fact that the domestic inventors chose to wait till the releases of Union Budget 2021-22 before taking any financial decision. 

Vaccine, Covid Situation and Geopolitical Trends to Be Major Drivers for Indian Stock Market in 2021

The global outbreak of COVID-19 pandemic, news about the release of vaccines, Union budget 2021-22, economic growth and recovery and geopolitical trends are the major factors that would be driving the sentiments of investors in the year 2021 after the pandemic year 2020 that witnessed both good as well as bad times for the stock market in India (PTI, 2021). There were losses incurred by the investors while few record-shattering gains were also observed which depicted that the investors went on a roller-coaster ride amidst the COVID-19 pandemic followed by announcements of massive stimulus measures.  

The Indian stock market experts are of the view that 2021 will see massive changes in the perception and preference of people towards buying and selling of shares, stocks, assets and equities in the financial markets thus affecting their financial decision. In the words of Mr. Hemant Kanawala, Head, Kotak Mahindra Life Insurance, “If 2020 was a year of COVID infection, lockdown and recession, 2021 will be a year of vaccination, reopening and recovery.” (PTI, 2021).

Some new highs are continuously observed in the markets due to the positive news on the progress of COVID-19 vaccines and US stimulus announcement. The FY21 will be marked with greater hopes of early release and distribution of COVID-19 vaccine, normalisation of economic activities and undisturbed growth recovery. This will result in better recovery in both economies as well as earnings (PTI, 2021).

The optimism surrounding the vaccine release and measures supporting liquidity which was on a rough path during trading sessions in March 2020 has infused positivity and life into the Indian equity market.  As countries are in a race to vaccinate their large number of people against COVID-19 amidst the news of vaccine makers struggling continuously to meet their demand, India is making plans to speed up the manufacturing of vaccines so as to supply it to 60 nations in the coming months of FY21. 

India’s role as the “pharmacy to the world”, which will be reinforced by its supply of vaccines, will win it goodwill that will stand New Delhi in good stead as it looks to carve out a bigger role for itself in world affairs, analysts said (Roche, 2021). 

Companies’ Quarterly (Q3) Results: An Overview of Performance During the Covid-19 Pandemic

Various companies in India are seeking an increase in their net profits during the Q3 following the strategies adopted by them to deal with the pandemic. This makes Q3 extremely important from the economic recovery point of view. 

The following section suffices the performance of several companies in Q3 and highlights the net profits and net losses incurred by them respectively. 

1. Triveni Turbine posts ₹27.54 crore net profit in Q3.
2. IDFC First Bank posts ₹130 crore profit in Q3.
3. Relaxo Footwears Q3 net profit jumps 67% to ₹90 crores.
4. Shree Cements Q3 profit jumps over two folds to ₹632 crores.
5. ICICI Bank Q3 net profit rises 19.1% to ₹4,939.6 crore.
6. Tata Consumer Q3 results: Net profit rises to 29% to 218 crores, revenue up 23%.
7. Escorts’ net profits jumped 83% in Q3. 
8. Reliance Industries Ltd. net profits rose 12% in Q3. 
9. DLF posts 9% jump in net profits in Q3.
10. Tata Motors recorded a 67% rise in net profits on account of festive boost.
11. IRCTC Q3 net profits plunged to 67%.
12. TVS Q3 net profits rose to 120%. 
13. Maruti Suzuki Q3 net profits rose to 24%.
14. HUL Q3 net profits jumped 19% on account of demand recovery.
15. JSW Steel net profit surges 93% in Q3. 

The following companies showed a decline in their net profits during Q3:

1. CITY Union bank Q3 net profits decline 12%.
2. Adani enterprises net profits decline by 10% in Q3.
3. HDFC Q3 net profits decline by 65%.
4. Chevron falls to a fourth-quarter loss on weak refining charges.
5. Union Bank of India net profits drop 37% in Q3.
6. IndusInd Bank net profits fell 34% in Q3.
7. Indigo reports quarterly loss of Rs. 620 crore.
8. Axis Bank net profits drop 36% in Q3.
9. Bardhan Bank Q3 net profit falls 14%.
10. PVR reports net loss of Rs. 49 crore in Q3. 

The net earnings of companies in Q3 points to economic recovery for India. Some of the companies dealing with the consumer durables and automobiles like HUL, TVS, Maruti Suzuki and Tata Motors registered a sharp increase in their net profits due to the festive boost that led to the demand recovery in the economy. 

The oil and gas companies like Reliance Industries Ltd. showed a rise of 12% in their net profits during Q3. However, the analysts are concerned over the issue of transparency as the company made a firm decision of not reporting its gross refining margin. The net subscriber of the Info COMM department of Reliance Industries increased to 5.2 million in the third quarter showing the trust placed by the customers in the reliance company (Bhardwaj, 2021). 

Some of the Banks like City Union Bank, HDFC Bank, Union Bank of India, IndusInd Bank and Axis Bank have announced their quarterly results which reported a decline in their net profits. This is because of the rising NPAs of these banks which is acting as a major driver for losing the confidence entrusted by the customers in these banks. The shareholders are not receiving the due dividends which are making the banks think of the measures to take care of probable hit on the asset quality for the quarter. 

Forecast for Indian Rupee to Average at Rs 75.50/USD for 2021

With the revision in Forecast for the Indian rupee from Rs 77/USD to average at Rs 75.50/USD, the central banks of both the countries- RBI and the Fed are in the row for a stronger 2021 forecast. This is followed by the expectation that the rupee will trade only slightly weaker over the upcoming near term from the current rupee levels. There was depreciatory pressure built up on the rupee due to the declining terms of trade which arose from a rise in oil prices and central bank foreign exchange intervention aimed at combating the imported inflation (Kumar, 2021).

It is expected that over the longer term, the overvaluation of rupee in real terms in India should aim at exerting weakening pressure for the rupee vis-à-vis the US dollar. In addition to this, the experts of the Indian economy are expecting a 50 basis point cut in the interest rates and repo rates by the RBI which will also add to the downward pressure on the Indian rupee. 

According to the forecast made by Fitch Solutions, there are two factors that will partially offset the effect of depreciatory pressure on the Indian rupee. First, the adoption of the loose fiscal and monetary policy by the US Fed will exert downside pressure on the US dollar in 2021 as well that would ultimately offset rupee weakness. 

Second, the RBI, with a foreign exchange reserve position of USD 578 billion as of December 2020, representing an import cover of around 19 months, will likely intervene to prevent excessive rupee weakness to manage imported inflation to reduce the risk of high inflation derailing India’s recovery in 2021 (Kumar, 2021). 

Dalal Street Cheers Budget 2021 as Sensex Surges 2,315 Points, Nifty Settles at 14,281

While the Union Finance Minister Nirmala Sitharaman presented the Union Budget 2021-22 on the morning of February 1, 2021; the Indian stock market reacted to the proposals she announced on the floor of the Lok Sabha. The Indian equity indices responded to the Union Budget 2021 by breaking up the six-day losing streak as they cheered the announcement of the government’s plan for the economic recovery. As a result, the Nifty was up 646.6 points and settled at 14,281 while the Sensex recorded the best Budget day since 1997 and surged 2,315 points. 

The volume of shares on the NSE was highest on Budget day. All the sectoral indices except pharma recorded a gain of 1-8%. The other broad market indices like BSE Midcap and Small cap rose 2-3%. This is because the markets and investors speculated that the Banks, Materials and Metals sector might be benefitted by the increasing privatisation and spending in the Union Budget. The stock market of Asia gained as well after the COVID-19 vaccine maker AstraZeneca agreed to increase their supplies to Europe amidst the worries about the pandemic. 

The manufacturing sector of India also started the year 2021 on a strong note as the Manufacturing Purchasing Managers Index (PMI) for the month of January stood at 57.7, which reflected the strongest improvement in three months. Manufacturing PMI in December 2020 and November 2020 came in at 56.4 and 56.3, respectively (Pachal, 2021).

Top Sensex gainers were  IndusInd Bank, ICICI Bank, Bajaj FinServ, State Bank of India (SBI), Larsen $ Toubro, Housing Development Finance Corporation (GDFC) on the Budget day. On the flip side, Dr Reddy’s, Tech Mahindra and Hindustan Unilever Ltd (HUL) were the only Sensex laggards as shown in the red colour in the following illustration (Pachal, 2021). 

2021: The year of The Great Reset for Indian Stock Market

The sentiments of the Dalal Street in Mumbai have been largely driven by the geopolitical situation with the new US President Joe Biden taking charge of the largest superpower of the world-USA. The experts are of the view that the improvement in the trade relations between US and India under the new US president and his administration will play a major role in speeding up the economic recovery (PTI, 2021). 

The continuity of the global liquidity in the financial markets and the changing geopolitical situation with Joe Biden taking the charge of the White House will drive global sentiments. The global recovery’s leading variables added that the COVID-19 is not going to disappear just like that, as the outgoing US President Donald Trump suggested to the world in his last speech. Although there are instances of substantial recovery of the economy from the initial depths of economic lockdown, the losses to the macroeconomic variables like GDP and employment around the world are yet to pick up its original pace (Mint, 2021). This will hold true with the releases of vaccines and its availability to the masses. 

For the European Union (EU), navigating the COVID-19 crises has been challenging yet the Europeans stuck together in these difficult times and grew together, forging a more cohesive bloc. In 2021, it is believed that global cooperation will make a strong comeback and the EU will pursue its own strategic autonomy in order to safeguard its citizens and their interests in the coming decades (Mint, 2021). 

In my opinion, the COVID-19 pandemic in 2020 delivered some of the greatest shocks to the global economies since World War II. The entire economies have been locked down and people adjusted to the new ways of working, studying and socialising. There are millions of people who have lost their jobs and became unemployed as a result of which inequality and poverty soared. The globalised economies acting as lifelines to billions of people worldwide has suddenly become vulnerable, owing to the disruptions of the global supply chains and government strategies to protect the domestic stock market. Given the persistence of COVID-19, the recovery in 2021 will largely depend on how effectively the vaccine is distributed and how the various industry stakeholders will react to the Union Budget 2021-22. The multidisciplinary robust approach will be required to mitigate the ill-effects of the pandemic and to address longer-term challenges posed by climate change. For this current and former political leaders, scholars, academicians, senior policymakers should provide exclusive analyses of the tasks that lie ahead in order to ensure that we are ready to meet the forthcoming challenges. 

References

Bhardwaj, S. (2021, February 2). Q3 Nifty Earnings Point To Recovery For India Inc. Bloomberg Quint. https://www.bloombergquint.com/quarterly-earnings/q3-nifty-earnings-point-to-recovery-for-india-inc

Dhanorker, S. (2020, June 29). What stocks are FPIs, FIIs and DIIs buying and selling? Economic Times. https://economictimes.indiatimes.com/wealth/invest/retail-investors-urged-to-stay-away-from-gamestop-inspired-communities/articleshow/80663373.cms

Kumar, S. (2021, January 4). Fitch Solutions revises forecast for Indian rupee to average at Rs 75.50/USD for 2021. Hindustan Times. https://www.hindustantimes.com/business-news/fitch-solutions-revises-forecast-for-indian-rupee-to-average-at-rs-75-50-usd-for-2021/story-u0nP8yvh83aeVb77OEz5kO.html

Mint. (2021, January 1). Lessons from COVID-19 pandemic. Mint. https://www.livemint.com/news/world/2021-the-year-of-the-great-reset-11609434044784.html

Pachal, D. (2021, February 1). Budget 2021 Market HIGHLIGHTS: Sensex zooms 2315 pts, ends at 48,600, Nifty at 14,281 as D-St cheered Budget. The Indian Express. https://indianexpress.com/article/business/budget/budget-2021-market-live-updates-bse-sensex-nse-nifty-stocks-shares-benchmark-indices-finance-minister-nirmala-sitharaman-7169479/

PTI. (2021, January 1). Analysis of Budget 2021. Economic Times. https://economictimes.indiatimes.com/markets/stocks/news/vaccine-covid-situation-geopolitical-trends-budget-to-be-major-drivers-for-indian-equities-in-2021/articleshow/80056883.cms

Roche, E. (2021, January 31). India ramps up exports of covid vaccines to plug supply gaps. Mint. https://www.livemint.com/news/india/india-a-major-player-at-home-and-world-in-covid-vaccination-drive-11612085153226.html

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COVID-19: An opportunity to fix the problems in the Tourism Industry  

It was in the month of March when people were busy packing their bags and planning the itineraries to go on a holiday spree that COVID-19 hit the country. This led to the disruption of the global supply chain with all the economic activities coming to a halt. With the restrictions on the movement of people across the international borders in place, domestic tourism emerged as the ‘silver lining’ for the country. Over the years, due to the propagation of the networks, Indians have increasingly become aware of the lesser-known destinations which are the hidden treasures in our geography. The domestic tourism registered a growth rate of around 10 per cent with the number of domestic tourists increasing from 1.05 billion to 1.85 billion from 2016 to 2019. This is in due line with the ‘Dekho Apna Desh’ campaign which is started by the Ministry of Tourism to boost domestic tourism (ETTravelWorld, 2020). 

COVID-19, despite its negative effects on the tourism industry, can be turned into an opportunity to fix the problems and challenges that have pre-existed in the industry. As we adapt to the new normal, there is a need to mould India’s tourism industry into the one that is sustainable in the long run. Given the varied recovery plans adopted by the states, the revival strategies will have to be tailored to the specific context (Darbari, 2020). 

Reviving the Domestic Tourism 

The first step to the recovery is rebuilding consumer trust and confidence. As the tourists will be back to travelling with a changed mindset, they need the assurance that all the safety and health standards are in place during their stay which would, in turn, require percolation of the technological innovation in the tourism industry. The COVID-19 gave ample time to the hotels and the tourist places to access their carrying capacity and accordingly devise the strategies to ensure social distancing as people have started to travel again. The proper implementation of the carrying capacity across all the popular tourists’ destination will ensure that people follow the social distancing norms as they spread out and contribute to the livelihood of people who are directly dependent on the tourism.  This will serve the dual purpose of restoring the ecological imbalance caused by over-tourism while boosting domestic tourism in the emerging destinations of the country. 

Every Indian state has regions that are heavily dependent on tourism. These regions should be used as the basis for developing a comprehensive recovery plan for the tourism sector along with the local economy. The various stakeholders such as local government, tourism associations, transport associations, business houses, civil bodies and state government must work together to take proactive measures so that people are aware of the tourist places that exist in their own regions and the historical importance of visiting these places (Siddiqui, 2020). All these stakeholders have to complement each other’s working and focus on making the regional people as the important stakeholder of the industry. The local bodies who constitute these regional people must comply with the Tourism Department of the State and work together in devising the guidelines related to sanitization of the rooms, lodges, hotels and restaurants for sustaining the tourism industry within the vicinity of the region. This will further boost the confidence in the tourists as they will receive better quality services. 

The destinations which are emerging as the tourism hotspots in India are facing challenges in terms of disposal of the waste. The waste is either burnt or left untreated in the landfills which release toxic chemicals that are harmful to the environment.  As tourism is resuming, the destinations will see a significant increase in the number of biomedical wastes such as sanitizers, masks and gloves. This disposal will lead to contamination both among locals as well as tourists. In order to stop this contamination, the collection drives should be initiated across the tourist’s destinations of the country so that the biomedical waste is able to reach the nearest recycling centres. 

Tourism is often believed for creating the livelihoods of rural communities through sustainable development. However, it was observed that the tourism policies of India have focused more on the creation of tourists orientated destinations that cater to their demands. For example, Ladakh, known for its natural landscapes and breathtaking views, receives very less rainfall annually and every drop of water is preciously preserved for carrying out agriculture in the area. But the growing domestic tourism which is kept unchecked is leading to the scarcity of the water as the tourists are demanding for running showers during their stay. Thus, there is a growing need that paradigm of the tourism in the new normal should be focusing on creating better places to live first by preserving the traditional style of local communities while they are ready to host the tourists again. In Ladakh, this means restoring the indigenous practices of the local people so that in a world which is suffering from global warming and climate change, we are able to position Ladakh as an ecological paradise which is paving the way for resilience (Nath, 2020). 

The comprehensive network of rural tourism should also be developed wherein the local rural communities are provided with an online platform to sell their products. This will ensure that there is no disruption in the flow of income that is reaching to them in return for their products. For example, the locals who are the owners of the cafes in Himachal Pradesh are selling the ingredients of their dishes like various types of Indian spices that are making its way to the households of the country. Some of the other locals are selling the items like fridge magnets, badges and postcards. People are ordering them to witness these places though virtually. 

The international organizations like United Nations Development Program (UNDP) must work with the Ministry of Environment, Forest and Climate Change in the snow leopard landscapes to engage young people, especially women, to create tourism-led enterprises. These enterprises will not only generate employment for the locals in the region but also provide unique solutions to the challenges, especially in the mountain areas. The major challenges include inaccessibility, fragility and marginality. The creation of the enterprises will overcome these challenges by enhancing connectivity to areas with difficult accessibility as the niche tourism destinations will be emerging. The economic incentives will be provided for the preservation of natural and cultural heritage along with the alternatives to work that typically involves drudgery, such as farming. 

As the tourist destinations are reopening their doors for tourism, the potential travelers must come forward to launch an awareness campaign where they will be making people aware on the measures taken by the local people for coronavirus safety based on their interaction with them along with the significance of supporting the livelihoods of the locals while ensuring that the ecological balance of the environment is not disturbed. When people will hear the experiences of travelers and watch their videos, they will realize the importance of the changing paradigm of tourism towards the slow travel destinations. These destinations will see more people spending time in a single spot as they adapt to the new normal and continue to work from home. This, in turn, will give the incentives to the owners of the guest houses, hostels, hotels and homestays to convert their places into workstations that will provide all the facilities including meals, Wi-Fi connectivity, accommodation while enabling people to continue their work from home. These workspaces are located in some of the stunning new locations in India. People can expand their worldview by traveling to these places as they are the emerging new homes for the digital nomads. 

Conclusion

The tourism industry of the country holds an immense potential that needs to be gradually unleashed to create COVID-19 ready destination that is sustainable and resilient in the long run. The destinations will now thrive for achieving the zero-carbon footprint while the enduing proper level of hygiene. The tour operators will be more responsible in sharing the experiences of the local communities to the tourists. Travelers will now have to be more careful while planning their itineraries that will incorporate the ways to deal with the uncertainties as they will step their foot out to embark on a new journey. The traditional philosophies of ‘Atithi Devo Bhava’ that we have inherited decades ago will invite our citizens and motivate them to explore our own country. 

Bibliography

Ghosh, A. (2020). Post Covid19 strategy to survive the Tourism industry: Indian Perspective. Munich Personal RePEc Archive, 10 .

Nath, S. (2020 , August 3 ). As we emerge into a ‘new normal’, India needs to evolve to create a COVID-ready tourism destination. Retrieved from Firstpost: https://www.firstpost.com/india/as-we-emerge-into-a-new-normal-india-needs-to-evolve-to-create-a-covid-ready-tourism-destination-8662891.html

ETTravelWorld. (2020, May 14 ). Domestic tourism: Silver lining in the post-Covid world. Retrieved from ET Travel World : https://travel.economictimes.indiatimes.com/news/destination/states/domestic-tourism-silver-lining-in-the-post-covid-world/75732912

Darbari, R. (2020 , August 24 ). Travel and tourism recovery: a perspective for South Asia and lessons for other regions in the age of COVID-19. Retrieved from World Economic Forum: https://www.weforum.org/agenda/2020/08/travel-and-tourism-recovery-south-asia-covid19-pandemic-economy-india-nepal-bhutan-sri-lanka/

Nath, S. (2020, August 3). As we emerge into a ‘new normal’, India needs to evolve to create a COVID-ready tourism destination. Retrieved from Firstpost : https://www.firstpost.com/india/as-we-emerge-into-a-new-normal-india-needs-to-evolve-to-create-a-covid-ready-tourism-destination-8662891.html

Nath, S. (2020 , August 23). Retrieved from Firstspot.

Siddiqui, H. (2020 , August 15). Post-covid travel: Begin by promoting local tourism, prepare road map with private sector, says Gustavo J Segura, Costa Rican Minister. Retrieved from Financial Express: https://www.financialexpress.com/lifestyle/travel-tourism/post-covid-travel-begin-by-promoting-local-tourism-prepare-road-map-with-private-sector-says-gustavo-j-segura-costa-rican-minister/2056051/

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