QuantEco’s DART (Daily Activity and Recovery Tracker) Index for week ending 6th Feb-22 posted its third weekly rise. On WoW basis, the index expanded by 5.7% compared to 5.0% in the previous week (revised up from 4.7%).
With the COVID wave having peaked out and receding now, several states are set to withdraw most restrictions over the course of next 1-2 weeks. This has allowed a strong recovery in economic activity to take shape, as validated by the DART index that has risen by a cumulative ~10% over last week of Jan-22 and first week of Feb-22.
From a growth perspective, economic activity is expected to get evened out over the months of Jan-Feb-22. While some year-end seasonality typically seen in activity indicators and government spending may offer respite in Mar-22, but the surge in crude oil prices above USD 90 pb poses headwinds if sustained. Post the Budget, which focused on capex push along with moderate fiscal consolidation remains, all eyes are now set on the RBI policy scheduled later this week (10th Feb-22). Against the backdrop of Fed’s hawkish policy pivot and upside risks to domestic inflation, we believe the central bank could start refocusing on inflation management in a calibrated manner. This we believe will begin with RBI moving forward formally on interest rate normalization and announcing a 20-bps hike in the reverse repo rate this week.
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