ECONOMIC ACTIVITY CROSSES PRE-PANDEMIC LEVELS: NOMURA

MUMBAI: The Nomura India Business Resumption Index (NIBRI), which tracks high-frequency data such as mobility, rose to a record of 109.9 for the week ended November 14 from a revised 107.7 in the previous week.

This suggests the business resumption index is currently 10 percentage points above prepandemic levels, according to Nomura.

“We have observed considerable volatility in mobility trends. Also, supply-side bottlenecks like the ongoing energy crisis and chip shortages add to downside risks, as is already evident in the latest industrial production data, which could shave 1 percentage point off our gross domestic product growth outlook of 9.2%,” Nomura said.

So far, festive demand has been strong, with retail sales rising by 74% from a year earlier over the Diwali week, which presents an optimistic outlook for the ongoing wedding season and year-end festivities, according to Nomura. Despite vaccine hesitancy, cases remain capped, although a rise in daily deaths suggests another resurgence cannot be ruled out, it added.

Google workplace mobility index fell sharply by 20.3 percentage points and retail and recreation index by 1.3 percentage points, but the Apple driving index rose by a whopping 34 percentage points in the week ended November 14. The labour participation rate remained at 39.7%, while power demand rose by 5.5% week-on-week after four weeks of contraction.

Policy normalization by the RBI is getting closer, Nomura’s economists Sonal Varma and Aurodeep Nandi said.

“There could be greater consensus within the monetary policy committee that ultra-easy monetary policy is no longer necessary. We expect upside inflation surprises in the coming months to be accompanied by elevated core inflation and more signals of demand-side recovery, thereby triggering policy normalization,” said Varma and Nandi in a note.