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The Nomura India Business Resumption Index fell to 113.0 for the week ending December 5 from 113.9 in the prior week, primarily reflecting a fall in the Apple driving index by 4.8 percentage points (pp), and in power demand by 5.4 per cent w-o-w from 1.2 per cent previously.
Outside these, Google workplace and retail and recreation indices rose by 4.0pp and 0.4pp respectively, and labour participation rate remained flat at ~40.5 per cent.
"Mobility indicators may start to taper in the coming weeks. India has detected 21 Omicron cases so far, and while overall cases are low, close monitoring is warranted, as mobility had risen above pre-pandemic levels in November, while the fully vaccinated are only 35% of the population. Enhanced border restrictions and testing may also cause increased public caution, weighing on services," Nomura said.
"Experience suggests that virus waves have a negative impact on growth, but also lead to higher inflation, due to disruptions to supply chains. Consequently, we maintain our base case view that the RBI will normalize the reverse repo rate fully by 40bp at its MPC meeting this week, as economies are learning to live with the virus, GDP is back to pre-pandemic levels, and core inflation is near 6 per cent. Nevertheless, we attach a 30 per cent probability of a partial hike of 15-20bp and 15 per cent probability of status quo," it added.
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