IMPACT OF SWINE FLU AND MONSOON ON SHARE PRICE
SWINE FLU EFFECT
As the global economy is about to recover from the menace of recession it is now being hit with a series of swine flu cases that is yet to be contained. The outbreak has the origination from Mexico where about more than 100 people has lost their lives. In India till now 63 cases of H1N1 flu were reported.
Many have likened the economic impact of swine flu to that of SARS (Severe Acute Respiratory Syndrome) back in November 2002 to July 2003, which delayed the post-dot-com recovery by several months.
What is Swine flu?
Swine flu is a respiratory disease. WHO says it is caused by influenza type A which infects swine, or pigs. The infection is undergoing constant mutation or change and there are several types of swine flu.
How does the swine flu spread?
The flu spread most likely through coughing or sneezing. The symptoms are quite like that of any other flu. These include fever, cough, sore throat, body ache, chill and fatigue.Treatment for swine flu:
Till now there is no vaccine for the treatment of swine flu. Oseltamivir and Tamiflu are the generic drugs that can be used for the treatment.
ECONOMIC EFFECT OF SWINE FLU:
1. The major outbreak of swine flu could be increasing the cash strapped Indian government thereby increasing the fiscal deficit.2. FII outflow will bring the stock market down.3. Due to the massive capital outflow rupee is likely to depreciate further.4. Industries could be affected as it will disrupt the supply chain.5. GDP is expected to take hit due to decline in economic activity.
INDUSTRIES LIKELY TO BE AFFECTED BY THE SWINE FLU:
(a) TOURISM INDUSTRIES: Tourism Industry which has already been hit by the global economic slowdown is now scared that if the swine flu is not controlled by the time of tourism peak season i.e.; October, it will take a toll on the tourism industry.
(b) AIRLINE: As the swine flu is likely to slow down the movement of people across the country and within the country, it is likely to bring down the occupancy rate of the airline thereby hitting the top line and bottom line.
Other industries will not see a direct impact from the pandemic. But economic slowdown caused by the disease will restrict production and economic activity. This will hit their profitability.
COMPANIES THAT WILL BENEFIT FROM SWINE FLU:
(A) CIPLA: Cipla has the capacity to manufacture up to 1.5 million doses of Oseltamivir. Due to its huge prouction capacity it is expected to benefit if any outbreak happens .
SWINE FLU EFFECT
As the global economy is about to recover from the menace of recession it is now being hit with a series of swine flu cases that is yet to be contained. The outbreak has the origination from Mexico where about more than 100 people has lost their lives. In India till now 63 cases of H1N1 flu were reported.
Many have likened the economic impact of swine flu to that of SARS (Severe Acute Respiratory Syndrome) back in November 2002 to July 2003, which delayed the post-dot-com recovery by several months.
What is Swine flu?
Swine flu is a respiratory disease. WHO says it is caused by influenza type A which infects swine, or pigs. The infection is undergoing constant mutation or change and there are several types of swine flu.
How does the swine flu spread?
The flu spread most likely through coughing or sneezing. The symptoms are quite like that of any other flu. These include fever, cough, sore throat, body ache, chill and fatigue.Treatment for swine flu:
Till now there is no vaccine for the treatment of swine flu. Oseltamivir and Tamiflu are the generic drugs that can be used for the treatment.
ECONOMIC EFFECT OF SWINE FLU:
1. The major outbreak of swine flu could be increasing the cash strapped Indian government thereby increasing the fiscal deficit.2. FII outflow will bring the stock market down.3. Due to the massive capital outflow rupee is likely to depreciate further.4. Industries could be affected as it will disrupt the supply chain.5. GDP is expected to take hit due to decline in economic activity.
INDUSTRIES LIKELY TO BE AFFECTED BY THE SWINE FLU:
(a) TOURISM INDUSTRIES: Tourism Industry which has already been hit by the global economic slowdown is now scared that if the swine flu is not controlled by the time of tourism peak season i.e.; October, it will take a toll on the tourism industry.
(b) AIRLINE: As the swine flu is likely to slow down the movement of people across the country and within the country, it is likely to bring down the occupancy rate of the airline thereby hitting the top line and bottom line.
Other industries will not see a direct impact from the pandemic. But economic slowdown caused by the disease will restrict production and economic activity. This will hit their profitability.
COMPANIES THAT WILL BENEFIT FROM SWINE FLU:
(A) CIPLA: Cipla has the capacity to manufacture up to 1.5 million doses of Oseltamivir. Due to its huge prouction capacity it is expected to benefit if any outbreak happens .
(B) RANBAXY: Ranbaxy has the production capacity that can produce and supply Oseltamivir at very short notice.
MONSOON EFFECT
MONSOON EFFECT
A clear blue sky in June is emerging to be a cause of concern for Dalal Street. A number of broking houses have already put their investors on alert: It is expected weakness in the market and additional pain on the fiscal front in case the monsoon is substantially below normal, which in turn could affect agricultural output. And what is adding to these concerns is the chance of El Nino, a global weather-related phenomenon that usually leads to a draught-like situation in India. So at this point the question that a section of the market players is asking: "Can the Street discount the drizzles and support the three-month old bull run?"
"The delay in the onset of the monsoon and rising El Nino risks has revived memories of the market sell off during the drought of 2002," a report from CLSA, one of the largest foreign brokerages in India, reported few days ago.
El Nino, an abnormal warming of surface ocean waters in the eastern tropical Pacific, is one part of what's called the Southern Oscillation. The Southern Oscillation is the see-saw pattern of reversing surface air pressure between the eastern and western tropical Pacific; when the surface pressure is high in the eastern tropical Pacific it is low in the western tropical Pacific, and vice-versa. Because the ocean warming and pressure reversals are, for the most part, simultaneous, scientists call this phenomenon the El Nino/Southern Oscillation or ENSO for short. South American fisherman have given this phenomenon the name El Nino, which is Spanish for "The Christ Child," because it comes about the time of the celebration of the birth of the Christ Child-Christmas.
Scientists do not really understand how El Nino forms. It is believed that El Nino may have contributed to the 1993 Mississippi and 1995 California floods, drought conditions in South America, Africa and Australia. It is also believed that El Nino contributed to the lack of serious storms such as hurricanes in the North Atlantic which spared states like Florida from serious storm related damage.
Unfortunately not all El Nino's are the same nor does the atmosphere always react in the same way from one El Nino to another. This is why NASA's Earth scientists continue to take part in international efforts to understand El Nino events. Hopefully one day scientists will be able to provide sufficient warning so that we can be better prepared to deal with the damages and changes that El Nino causes in the weather.
To know more about El Nino click the link below :
http://earthobservatory.nasa.gov/Features/ElNino/Anim/elnino.mov
WHAT INDIAN METROLOGICAL DEPARTMENT SAYS?
Going by the prediction of IMD we would have a precipitation of 854 mm the lowest in last 4 years. The levels of water in the reservoirs are also down by 34%. If the spatial and temporal distribution of the rains is poor we may see a drop in Kharrif crop by anywhere between 2-4 %. The IMD had said last week that rainfall for the week ended June 3 was deficient by a substantial 35%. If we believe the IMD that monsoon will be good and will revive around June 20, it is very critical that it does not stay concentrated in a small geographical area, something that could impact overall farm output significantly and, consequently, the nation’s economy and GDP growth. Timely showers help increase yields of crops including rice, corn, soybeans and sugar cane that are planted after the onset of the rainy season.
Due to this delay in monsoon Kharif operations, particularly direct sown paddy will be considerably delayed and will upset the Kharif programme. The agricultural sector is an important contributor to the India GDP. Agriculture sector employs around 60% of the total workforce in India and contributes about 14-15% of the Indian GDP. Agriculture also contributes about 20-25% of our national income, a decline in agricultural growth will pull the overall growth rate in GDP down. Thus, if agricultural output declines, overall GDP will perhaps grow at 5-6% instead of 7-8% per cent. Also there is a direct co-relation between agricultural growth and Industrial production. Over the last one year the domestic industry has been somewhat cushioned from the economic downturn due to local demand. If the agricultural output falls - local demand falls as there is less of disposable income available and that will hit the Indian industry. I would also not rule out a rise in unemployment rate. In case the agricultural output falls we will see higher inflation and import of essential items like sugar. All this coupled together will prove to be bad for the Indian economy. Another thing that is worrying me is the hydel power production that will get impacted due to poor rains. In case the monsoon does not move as predicted government will need to look at its calculations of the PDS. Government will need to act rapidly and advice farmers on things like sowing of short and medium duration crops.
The MET department has said that the monsoon is reviving after a two week delay and is likely to cover Maharashtra, Karnataka and Andhra Pradesh in the next two-three days. But it is already in the middle of June and we are fast losing time. What impact will this have on agricultural production and on consumer demand?
ECONOMIC SIGNIFICANCE OF MONSOON:
Structurally the importance of agriculture as a percentage of GDP has decreased over the past few decades from nearly 50% in the 1970s to 17% now. But monsoon still has the important role to play in the economy as 60% of the total population depends on agriculture. Even today 60% of the agriculture is rainfall dependent.
INDIAN GROWTH STORY TO GET IMPACTED:
As post credit crisis companies have started looking towards the rural India for next big growth opportunity. Bad monsoon will have adverse impact on the company’s growth plan as rural income will decline, which will impact their consumption. Companies are looking towards the rural economy as they are least leveraged as compared to urban India.
Mr Adi Godrej ,Chairman, Godrej Group, the important thing was how the temporal and special distribution of the monsoon panned out. He said "I think it is too early to say that the monsoon is on a failing cause because if it starts soon and if the temporal and special distribution is good, we could still end up with an excellent monsoon and an excellent agricultural year," .He also added that "If we do have a failure of the monsoon after many years, it would have an effect on the gross domestic product (GDP) growth. But not anywhere near what it used to have in the past.”
FOOD STOCK:
According to Mr. A B Mazumdar, Deputy DG, Indian Meteorological Department, the monsoon delay will delay the sowing operation. He further added that the performance of monsoon or the progress of monsoon or advance of monsoon or delay in that didn’t had any impact on the overall performance of the monsoon. “So we can expect good monsoon even though at present things are not progressing as per the normal pattern,” he added.
At present government has the capability to tackle the weak monsoon as the food grain with the government is at 6 year high. But price increase will be more pronounced in cash crop and vegetables and fruits. Rice, sugarcane, cotton, soy and oilseeds are the key kharif crops.
If the rain Gods smile
Two-wheelers: Impact of monsoon on two-wheeler sales would be lesser in future, say analysts, though players like Hero Honda, Bajaj Auto and TVS, who have offerings in the rural segment, should see upsides if the raingods smile.
Tractors: Analysts expect an improvement in yearly figures in the event of a good monsoon this year, with Punjab Tractors and Ashok Leyland expected to benefit most.
FMCG: A good rainy season will lead to a feel-good factor among the rural populace which will lead to higher consumption, though the impact may not be visible till Diwali because of the 'lag-effect'. Companies like HLL and Nirma, which have a larger rural presence, should do well, say analysts.
Cement: More than the monsoon, the restructuring and consolidation happening in the industry and higher prices augur well for cement firms.
Construction, auto-ancillaries and fertiliser: stocks may also see a positive impact due to the spillover effects of a good monsoon.
SECTORS VULNERABLE TO MONSOON:
(A) FMCG
"The delay in the onset of the monsoon and rising El Nino risks has revived memories of the market sell off during the drought of 2002," a report from CLSA, one of the largest foreign brokerages in India, reported few days ago.
El Nino, an abnormal warming of surface ocean waters in the eastern tropical Pacific, is one part of what's called the Southern Oscillation. The Southern Oscillation is the see-saw pattern of reversing surface air pressure between the eastern and western tropical Pacific; when the surface pressure is high in the eastern tropical Pacific it is low in the western tropical Pacific, and vice-versa. Because the ocean warming and pressure reversals are, for the most part, simultaneous, scientists call this phenomenon the El Nino/Southern Oscillation or ENSO for short. South American fisherman have given this phenomenon the name El Nino, which is Spanish for "The Christ Child," because it comes about the time of the celebration of the birth of the Christ Child-Christmas.
Scientists do not really understand how El Nino forms. It is believed that El Nino may have contributed to the 1993 Mississippi and 1995 California floods, drought conditions in South America, Africa and Australia. It is also believed that El Nino contributed to the lack of serious storms such as hurricanes in the North Atlantic which spared states like Florida from serious storm related damage.
Unfortunately not all El Nino's are the same nor does the atmosphere always react in the same way from one El Nino to another. This is why NASA's Earth scientists continue to take part in international efforts to understand El Nino events. Hopefully one day scientists will be able to provide sufficient warning so that we can be better prepared to deal with the damages and changes that El Nino causes in the weather.
To know more about El Nino click the link below :
http://earthobservatory.nasa.gov/Features/ElNino/Anim/elnino.mov
WHAT INDIAN METROLOGICAL DEPARTMENT SAYS?
Going by the prediction of IMD we would have a precipitation of 854 mm the lowest in last 4 years. The levels of water in the reservoirs are also down by 34%. If the spatial and temporal distribution of the rains is poor we may see a drop in Kharrif crop by anywhere between 2-4 %. The IMD had said last week that rainfall for the week ended June 3 was deficient by a substantial 35%. If we believe the IMD that monsoon will be good and will revive around June 20, it is very critical that it does not stay concentrated in a small geographical area, something that could impact overall farm output significantly and, consequently, the nation’s economy and GDP growth. Timely showers help increase yields of crops including rice, corn, soybeans and sugar cane that are planted after the onset of the rainy season.
Due to this delay in monsoon Kharif operations, particularly direct sown paddy will be considerably delayed and will upset the Kharif programme. The agricultural sector is an important contributor to the India GDP. Agriculture sector employs around 60% of the total workforce in India and contributes about 14-15% of the Indian GDP. Agriculture also contributes about 20-25% of our national income, a decline in agricultural growth will pull the overall growth rate in GDP down. Thus, if agricultural output declines, overall GDP will perhaps grow at 5-6% instead of 7-8% per cent. Also there is a direct co-relation between agricultural growth and Industrial production. Over the last one year the domestic industry has been somewhat cushioned from the economic downturn due to local demand. If the agricultural output falls - local demand falls as there is less of disposable income available and that will hit the Indian industry. I would also not rule out a rise in unemployment rate. In case the agricultural output falls we will see higher inflation and import of essential items like sugar. All this coupled together will prove to be bad for the Indian economy. Another thing that is worrying me is the hydel power production that will get impacted due to poor rains. In case the monsoon does not move as predicted government will need to look at its calculations of the PDS. Government will need to act rapidly and advice farmers on things like sowing of short and medium duration crops.
The MET department has said that the monsoon is reviving after a two week delay and is likely to cover Maharashtra, Karnataka and Andhra Pradesh in the next two-three days. But it is already in the middle of June and we are fast losing time. What impact will this have on agricultural production and on consumer demand?
ECONOMIC SIGNIFICANCE OF MONSOON:
Structurally the importance of agriculture as a percentage of GDP has decreased over the past few decades from nearly 50% in the 1970s to 17% now. But monsoon still has the important role to play in the economy as 60% of the total population depends on agriculture. Even today 60% of the agriculture is rainfall dependent.
INDIAN GROWTH STORY TO GET IMPACTED:
As post credit crisis companies have started looking towards the rural India for next big growth opportunity. Bad monsoon will have adverse impact on the company’s growth plan as rural income will decline, which will impact their consumption. Companies are looking towards the rural economy as they are least leveraged as compared to urban India.
Mr Adi Godrej ,Chairman, Godrej Group, the important thing was how the temporal and special distribution of the monsoon panned out. He said "I think it is too early to say that the monsoon is on a failing cause because if it starts soon and if the temporal and special distribution is good, we could still end up with an excellent monsoon and an excellent agricultural year," .He also added that "If we do have a failure of the monsoon after many years, it would have an effect on the gross domestic product (GDP) growth. But not anywhere near what it used to have in the past.”
FOOD STOCK:
According to Mr. A B Mazumdar, Deputy DG, Indian Meteorological Department, the monsoon delay will delay the sowing operation. He further added that the performance of monsoon or the progress of monsoon or advance of monsoon or delay in that didn’t had any impact on the overall performance of the monsoon. “So we can expect good monsoon even though at present things are not progressing as per the normal pattern,” he added.
At present government has the capability to tackle the weak monsoon as the food grain with the government is at 6 year high. But price increase will be more pronounced in cash crop and vegetables and fruits. Rice, sugarcane, cotton, soy and oilseeds are the key kharif crops.
If the rain Gods smile
Two-wheelers: Impact of monsoon on two-wheeler sales would be lesser in future, say analysts, though players like Hero Honda, Bajaj Auto and TVS, who have offerings in the rural segment, should see upsides if the raingods smile.
Tractors: Analysts expect an improvement in yearly figures in the event of a good monsoon this year, with Punjab Tractors and Ashok Leyland expected to benefit most.
FMCG: A good rainy season will lead to a feel-good factor among the rural populace which will lead to higher consumption, though the impact may not be visible till Diwali because of the 'lag-effect'. Companies like HLL and Nirma, which have a larger rural presence, should do well, say analysts.
Cement: More than the monsoon, the restructuring and consolidation happening in the industry and higher prices augur well for cement firms.
Construction, auto-ancillaries and fertiliser: stocks may also see a positive impact due to the spillover effects of a good monsoon.
SECTORS VULNERABLE TO MONSOON:
(A) FMCG
(1) HUL (2) ITC
(B) 2-WHEELERS
(1) Hero Honda (2) Bajaj Auto
(C) FARM EQUIPMENT
(1) Mahindra & Mahindra(2) Escorts
(D) TELECOM
(D) TELECOM
(1) Bharti Airtel (2) Vodafone
(E) PSU BANKS
(E) PSU BANKS
(1) SBI (2) Bank of Baroda
SECTORS TO HAVE LEAST OR NO IMPACT OF MONSOON:
SECTORS TO HAVE LEAST OR NO IMPACT OF MONSOON:
(A) IT
(1) Infosys (2) Wipro
(B) POWER
(B) POWER
(1) NTPC (2) Tata Power
STOCK MARKET REACTION:
It has been seen that good monsoon keeps the stock market in good mood. If there is below normal rainfall or drought like situation the stock market performance will be significantly affected. The affect will be more pronounced because still the investors’ confidence is very fragile. Rising price of food items will make the inflation zooming, which will make the interest in the economy to go up. This will affect the investment and consumption.Good monsoon is not only good for Indian economy but also for stock market.
In terms of potential beneficiary in events of weak monsoon, the government chooses to increase the spending on infrastructure, irrigation and public work. Such increase in the rural expenditure will help firms engaged in (a) Infrastructure(b) Capital goods(c) Construction(d) Irrigation technologyIndirect beneficiary could be sectors like(a) Steel(b) Fertilizers(c) Cement
NEWS FROM THE METEOROLOGICAL DEPARTMENT
FOR KEEPING UPTODATE INFORMATION ON MONSOON PLEASE CLICK ON THE LINK BELOW:
STOCK MARKET REACTION:
It has been seen that good monsoon keeps the stock market in good mood. If there is below normal rainfall or drought like situation the stock market performance will be significantly affected. The affect will be more pronounced because still the investors’ confidence is very fragile. Rising price of food items will make the inflation zooming, which will make the interest in the economy to go up. This will affect the investment and consumption.Good monsoon is not only good for Indian economy but also for stock market.
In terms of potential beneficiary in events of weak monsoon, the government chooses to increase the spending on infrastructure, irrigation and public work. Such increase in the rural expenditure will help firms engaged in (a) Infrastructure(b) Capital goods(c) Construction(d) Irrigation technologyIndirect beneficiary could be sectors like(a) Steel(b) Fertilizers(c) Cement
NEWS FROM THE METEOROLOGICAL DEPARTMENT
FOR KEEPING UPTODATE INFORMATION ON MONSOON PLEASE CLICK ON THE LINK BELOW:
http://www.imd.ernet.in/
For latest Press news on Monsoon visit
http://www.imd.ernet.in/section/nhac/dynamic/lrf.htm
For latest Press news on Monsoon visit
http://www.imd.ernet.in/section/nhac/dynamic/lrf.htm
Posts
No comments:
Post a Comment