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The title must be a joke, right? What did we see when we just googled “Covid in India”?
- New York Times article titled – As Covid-19 Devastates India, Deaths Go Undercounted
- CNN article titled – No respite in India as country sets Covid-19 infection record for third straight day
- BBC article titled – Deaths climb as India reels from deadly Covid wave
If that is not enough, guess what many of India’s Super Rich did on this past Thursday? UK’s Daily Mail says:
So what made us even begin to think about getting into the Indian Stock Market given the above?
We saw one of the most dogmatic, most committed & most admired by British-American media Modi haters come out with a Bloomberg.com article titled “Modi Owns India’s Unfolding Covid Disaster“. We can’t think of a more arrogantly asinine commentator about India. But we like his timing because we have never known him to be anything but utterly wrong. His article on Tuesday, April 20 was an early signal for us to begin looking at India as an entry point.
Then came Prime Minister Modi’s speech to the Indian People on Tuesday evening. It was a straightforward speech that naturally was criticized by most in global media. We saw it differently. Our view is that smart leaders make a national address to their people at the right time when the panic is high and after they have taken steps that they could take. So we saw PM Modi’s speech as a timing trigger.
We have done it before & that worked very well. Think back to Friday, March 13, 2020 address by President Trump in the Rose Garden of the White House. Think back to what a horrible period that was. Just the day before, New York Governor Andrew Cuomo and New York City Mayor DeBlasio had declared Emergency in New York. And predictably, President Trump’s address from the Rose Garden was panned by the liberal US Media.
The following week continued the steep decline in financial markets. Look what the markets did the week after that Friday March 13, 2020 speech – Dow fell 17%; High-yield credit fell 13% & Oil fell 29%. But we saw a positive signal in that week’s carnage on Thursday, March 19, 2020. And that positive signal continued on Friday, March 20, 2020.
It proved to be a true signal because the US stock market bottomed in Monday, March 23, 2020. Understand the terrible travails of the Corona Virus continued for weeks & months. The steep & deep recession continued as well. But the markets kept moving up because they realized that the worst was behind us.
We urge all to read our article on March 22, 2020 that described the signal we saw. If you do, you will notice how flimsy & weak that signal was. When we wrote about that signal on Sunday, March 22, 2020, we were sure that we would be ridiculed. But we felt we had to point it out.
That is sort of where we are today. Because we think we saw a positive signal for the Indian market on Thursday, April 22, the second day after PM Modi’s speech on Tuesday, April 20. Look and see how flimsy & weak this signal is.
It looks a bit better in a relative Indian vs. US market chart (INDY-iShares India 50 ETF vs. SPY – S&P 500 ETF).
Even this relative view is far away from being a decent signal, let alone a reliable & robust one.
So why are we even considering it? For one, it is just a feeling we have. A feeling that has been described in the “darkest before dawn” phrase. The other is the reality that relative to the US stock market, the Indian stock market has fallen by over 15% in about 6 weeks.
Understand the markets could be totally right. America reportedly has 60 million doses of vaccines that are unused while India is desperately short of vaccines. And the Biden Administration has announced that they will not sell to India the raw materials needed to manufacture the vaccines in India.
But we can’t stop wondering how much wider could the S&P-INDY spread get? Based on fundamental & rational considerations, many would say the spread can get much wider. And they might be right. But, as we said, we can’t help feeling that we may be nearer to the end than to the beginning or middle of this divergence.
At this point, we must stress again that this article is simply a personal feeling & opinion article, a feeling/opinion that might prove to be dumb and NO ONE should act on anything in this article in any way.
This Corona Virus Wave in India
No one knows what brought about this highly infectious Corona Virus wave into India this year. But we found some interesting observations from professionals actively fighting this wave in an article dated April 21, 2021 on Nature.com titled India’s massive COVID surge puzzles scientists. Some excerpts are below:
- “[case numbers] began to rise again in March and the current peak is more than double the previous one. “The second wave has made the last one look like a ripple in a bathtub,” says Zarir Udwadia, a clinician-researcher in pulmonary medicine at P D Hinduja Hospital & Medical Research Centre in Mumbai, who spoke to Nature during a break from working in the intensive-care unit.
- “Udwadia has anecdotally observed that entire households are now getting infected — unlike in the first wave of COVID-19, when single individuals would test positive. He attributes this to the presence of more-infectious variants. “If one person in the family has it, I can guarantee that everyone in the family has it,” he says.”
- “Genomic surveillance data show that the variant B.1.1.7, which was first identified in the United Kingdom, has become the dominant form of the virus in the Indian state of Punjab.”
- “And a new and potentially concerning variant first identified in India late last year, known as B.1.617, has become dominant in the state of Maharashtra. B.1.617 has drawn attention because it contains two mutations that have been linked to increased transmissibility and an ability to evade immune protection. It has now been detected in 20 other countries. Laboratories in India are trying to culture it to test how fast it replicates, and whether blood from vaccinated individuals can block infection, says Jameel.”
- “Srinath Reddy, an epidemiologist and head of the Public Health Foundation of India in New Delhi, argues that people letting their guards down is a bigger driver. “The pandemic resurfaced in a fully open society where people were mixing and moving and travelling,” he says.”
- “The virus may be getting into populations that were previously able to protect themselves,” she says. That could include wealthier urban communities, in which people isolated during the first wave but had started mingling by the second.”
Below are some comments from Dr. Scott Gottlieb, previous FDA commissioner, about the Corona Virus wave in India in response to a question from CNBC’s Wilfred Frost:
- Frost – Dr. Gottlieb, I am sure you have seen situations in India at the moment; To what extent is that because of new variants that should worry us here vs. population dynamics there or low vaccination rates?
- Dr. Gottlieb’s answer:
- “It is unclear right now; B.1.1.7 definitely got into India & that’s accounting for some of the spread; that we are seeing the rapid spread and also they have a new 1.617 variant that has mutations in it that concern us; *** 4K mutation that is found in the Brazilian variant & also a Los Angeles strain as well; so it has two different mutations that account for some of the spread right now; we don’t really have a good sense how much of the infections are because of B.1.617 & B.1.17 ; but its a lot of the infections we are seeing. … ;”
- “there was a study out in December showing that probably about 40% of people in metropolitan areas of that country had already been infected; so it must be much higher right now; so they may be starting to reach a point where they are going to start to turn over as well; we will start to see cases hopefully come down because of the sheer number of people who have been infected; & they have also deployed 120 million vaccines; now that is a lot in our country but its not a lot over there where the population is much bigger; 10% of population ; but they are getting the vaccinated numbers up;”
Hmm! If Dr. Gottlieb proves correct & the cases in India start coming down (a VERY BIG IF), then the flimsy & weak market signal we think we saw this week may prove prescient.
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