The Indian economy had staged a V-shaped recovery post the second Covid wave
in Q1FY2022 due to the quick reopening of the economy. Moreover strong festive
demand also helped the recovery process. The manufacturing PMI for November
hit a 10-month high of 56.3 while services PMI at 58.1 for November point to a
continued solid pace of expansion in the services sector. While we expect the
economic recovery to continue, high global inflation and aggressive tightening by
the US Fed will be key issues in CY2022, though the impact of Omicron variant
should be transient and limited to 1QCY2022. We are positive on banking and
Consumer-facing sectors as we do not see any long lasting impact from Omicron
and expect strong rebound in earnings for the sectors in FY2023. We also remain
positive on Chemicals and IT sector given high medium-term growth visibility for
both the sectors.

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