Do we really care today about past economic data?

That’s the question we all should be asking ourselves – be it the GDP or inflation or IIP; it looks like the market shrugs off every such macro data and instead concentrates on what lay ahead. The market is concentrating only on the future and that explains why, despite Covid or the macro data indicators, the indices are running far ahead.

This is not just in India; even in the USA, inflation hit 5% for May, the highest level since 2008 and yet even there too, the markets remained buoyant. Lack of better avenues or too much liquidity or both, the markets today are no longer an indicator of the economy.

And that’s how we need to look at the IIP data of today. Last April, India had the most severe lockdown on earth; thus the low base effect makes the IIP for April’21 look almost silly – the economy YoY grew by a huge 134.4% and maybe this is how the picture will look – exaggerated, also in May and June too.

All the internals oof the IIP for April will be in triple digits and really, doesn’t make much sense. MoM, the numbers for April are very good and that’s because once again, there was a lockdown in March.

It is likely that the market will not react at all to this news. What we now need to see is how we keep a control over the corona as the country slowly starts opening up. The Damocles sword of the third wave hangs and its only vaccination and more vaccination, our only hope, which will reduce the impact.

Unemployment and growing number of urban poor is the reality and neither the rising markets nor the economic numbers reflect this truth. We can make all kind of conjectures and assumptions on the shape of recovery but we will see a sharp ‘V’ shape only when we are certain that we have got a control over the pandemic. Till then, given the dynamic environment, all data is that of the past, even that of the last month.

Maybe the market knows that the third wave will be mild…….?