Retail Savings and Investments in India - Coronavirus (COVID-19) Sector Impact

Summary

The Coronavirus (SARS-CoV-2) outbreak, dubbed COVID-19, is first and foremost a human tragedy, affecting millions of people globally. The contagious Coronavirus, which broke out at the close of 2019, has led to a medical emergency across the world, with the World Health Organization officially declaring the novel Coronavirus a pandemic on March 11, 2020.

Fears surrounding the impact of COVID-19 have already significantly impacted the global economy, with most countries across the world registering declines in their economic growth for the year to date. Many economists and institutions have cut their forecasts as a number of countries officially slipped into recession in Q1 2020.

We are seeing a similar trend in India - according to estimates GDP is expected to contract by 1.5% over the course of the fiscal year, and India is anticipated to slip into recession by the end of fiscal year 2020-21. The decline will have an adverse impact on all sectors, including retail savings and investments. While the government is easing restrictions in a calibrated manner, the surge in daily active case numbers is worrisome, with the country seeing a spike in new cases across several states. India now has the third-highest number of COVID-19 cases in the world behind the US and Brazil.

This report focuses on the impact of the coronavirus outbreak on the Indian economy and the country’s retail savings and investment market. It also highlights the measures adopted by the government to combat COVID-19. Based on our proprietary datasets, the snap shot contrasts the publisher's pre-COVID-19 forecasts and revised forecasts of total retail bond, deposits, equities and mutual funds holdings in terms of value and growth rates. It also analyses the effects on HNW wealth, examining the importance of different industries as a contributor to HNW wealth.

Scope

• India’s retail savings and investments are forecast to grow by a mere 0.2% over the course of 2020 as economic productivity has plummeted thanks to the impact of COVID-19. Although the easing of lockdown restrictions and restarting of economic activities has gradually improved stock market performance, volatility continues to persist as the pandemic remains a threat to the economy, with the number of cases still intensifying. Consequently, retail equity and mutual fund holdings are expected to take the brunt of the economy’s slowdown, with respective declines of 17.5% and 12.2% anticipated.
• Retail deposits have turned out to be the biggest gainer courtesy of a flight to safety away from risk assets. Additionally, a subsequent downturn in the consumer confidence index is further driving demand for deposits. According to the Reserve Bank of India (RBI), the index contracted from 85.6 in March 2020 to 63.7 in May 2020. However, more pronounced declines in risk asset holdings mean our revised overall retail savings and investments forecast for 2020 is 5.8 percentage points lower than before the onset of COVID-19.
• HNW wealth is forecast to grow by a mere 0.5% during 2020. However, the healthcare and technology sectors - the two largest contributors to HNW wealth - have held up more robustly than others. This will aid a rapid recovery, with HNW wealth growth forecast to bounce back to 13.9% in 2021.
• The financial services sector is among the most impacted in the short term due to an increase in bad loans. The NIFTY Banks index has already declined 34.1% for the year to June 30, 2020.
• The sectors which took the most damage - such as hotels, restaurants, and leisure - have low contributions to HNW wealth, allowing HNW wealth growth to bounce back rapidly with a strong 13.9% increase forecast for 2021.

Reasons to Buy

• Make strategic decisions using top-level revised forecast data on the Indian retail savings and investments industry.
• Understand the key market trends, challenges, and opportunities in the Indian retail savings and investments industry.
• Receive a comprehensive insight into the retail liquid asset holdings in India, including deposits, mutual funds, equities, and bonds.