Since I wrote my last blog I did a social experiment of deleting social media apps and getting away from it, at least for 9 days I did that and realised that I was wasting most of the time on doing useless things and could have utilised that time doing something else. Currently I am on instagram for various reasons other than socialising.
I decided that in this blog we should go back to the basics meaning how the world would start post crisis situation. Again I will be writing about the economy because that is what I can understand things easily.
Macro view
In the previous blog I wrote about investment strategies but this time I would be just giving my views on the probable changes that can happen in the economy. I will be starting with showing how the markets have crashed and the probability of going further down.
I decided that in this blog we should go back to the basics meaning how the world would start post crisis situation. Again I will be writing about the economy because that is what I can understand things easily.
Macro view
In the previous blog I wrote about investment strategies but this time I would be just giving my views on the probable changes that can happen in the economy. I will be starting with showing how the markets have crashed and the probability of going further down.
| Sensex | 27590.95 | -11032.75 | -28.56% |
| Nifty | 8083.80 | -3219.50 | -28.48% |
| Nifty Bank | 17249.30 | -11927.75 | -40.88% |
| Nifty IT | 11680.05 | -4043.15 | -25.71% |
| BSE Mid Cap | 10219.05 | -4544.59 | -30.78% |
| BSE 500 | 10527.29 | -4256.30 | -28.79% |
| BSE FMCG | 9982.00 | -1022.20 | -9.29% |
| BSE IT | 11780.88 | -3552.92 | -23.17% |
The above mentioned data shows the indices changes since last 1 month and we can understand that sensex as well as Nifty have crashed 29%, whereas bank Nify has crashed around 41% showing that more than any sector financial services have taken more hit as the assets are under stress because of the lock down and the moratorium provided to the business bringing a major possibility of future NPAs as there seems to be lack of demand post crisis from the consumer. Considering this situation, there is a long term impact as I mentioned in the previous blog that it might take atleast 2 years for the recovery for the economy the decisions by different countries of doing lock down for a longer period assures my claim regarding that and the MSMEs are most likely to be affected until an unless some specific stimulus bill or some new financial reforms are not given by the government.
Survival of the fittest
As the economic conditions prevail there are many possibilities if MSMEs shutting down or will be requiring restructuring from the banks because of the magnitude of shock to the corporate bottom line and the speed at which the things have happened has put new and young companies who are debt burden as well as startups in the risk of probable default and shutting down.
A different version of the economy
Every crisis teaches companies something new and those who survive the crisis will be starting to implement new strategies and policy structures. Since Covid-19, work from home has been very successful in most of the companies as well as in education fraternity making the companies remove some of the unproductive sales offices and making the employees work in remote locations even from home or from co-working space which would save their infrastructure costs as well as rental costs.
Localisation will start in major countries as since China was under lock down situation most of the big companies faced problems regarding supply chain solutions and keeping up with the pace of the demand. Thus, according to me the companies won't be only thinking of importing from a particular country but keeping multiple options so that business won't stop or be affected as it was in the current situation.
Millennial mindset changes
Millennials are of the mindset of not owning cars or having a house of their own, considering the increase awareness of health and safety there can be shift in demand from sharing economy to owning a vehicle as well as buying a house for long term consideration. This gives a realty check that there might be increase in demand in hatch back cars which are not very expensive also in affordable housing once the crisis gets over as most of the savings of people have been wiped out in the financial as well as health crisis.
Developmental Reforms
Though not definitely any particular type of reforms but as the need of the hour says that there would be financial reforms taking place to save the businesses and get things more streamlined and provide some sort of security to the business owners, also health infrastructure would be taken more seriously and proper development might be taken into consideration by forming a policy and giving incentives to the new businesses in certain essential areas.
But there is still a long way which needs to be passed as we will be surviving for few months and going just back to the basics where we all started.
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