The deserted Bombay Stock Exchange building is pictured as the Sensex went down after a lockdown in the wake of the start of the novel coronavirus pandemic, in Mumbai on March 23, 2020. Photo: The Times Of India

While small businesses are facing the heat as India battles the second wave of Covid-19 pandemic, the top-listed companies in the stock market have so far remained relatively unscathed.

Five of the 10 most valued companies together added over one trillion rupees (US$ 13.66 billion) in market valuation last week, with IT majors Tata Consultancy Services and Infosys being the top gainers, Press Trust of India reports.

Reliance Industries, Tata Consultancy Services, Infosys, Hindustan Unilever and Bajaj Finance also improved their valuation, while HDFC Bank, HDFC, ICICI Bank, State Bank of India and Kotak Mahindra Bank faced an erosion of market cap.

The valuation of Tata Consultancy Services jumped by 475 billion rupees to reach 12.1 trillion rupees, becoming the biggest gainer, while Infosys added 262 billion rupees to take its valuation to 6.16 trillion rupees. The market capitalization of Reliance Industries gained 142 billion rupees; Bajaj Finance, 75.6 billion rupees; and Hindustan Unilever, 58.5 billion rupees.

Among losers, mortgage lender HDFC topped the list with a market cap erosion of 109.68 billion rupees, followed by HDFC Bank, -82.49 billion rupees; ICICI Bank, -49.27 billion rupees; State Bank of India, -36.14 billion rupees; and Kotak Mahindra Bank -29.24 billion rupees.

Unlike the first wave, the current wave has so far failed to spark a deep stock selloff. Experts say the currently localized lockdown has not affected business activity as badly as last year. But they fear that the higher caseload and death toll during the second wave may lead to tougher restrictions.

Moreover, following up what they learned last year, the companies are now better equipped to continue their operations during a lockdown, have cut costs and streamlined operations – and many have even raised capital.

Income disparity

Interestingly in the last financial year ended March 31, the share of corporate profit in India’s gross domestic product hit a 10-year high of 2.69%. According to Business Standard newspaper, the ratio was at a record low of 1.6% in 2019-20, while it was the highest in 2010-11 at 3.2%. In 2020, India also added 40 billionaires to take its total to 177, according to the Hurun Global Rich List.

On the other hand, the country’s economy contracted 7.3% in 2020-21, its first full-year contraction in four decades. According to the Center for Monitoring Indian Economy, an employment think tank, the unemployment rate has gone up to 12% in May, 10 million jobs have been lost just on account of the Covid-19 second wave and 97% of the households in the country have experienced a decline in income. India’s annual per capita income has declined to $1,947 and it now trails behind that of neighboring Bangladesh ($2,227).

Experts are now raising concern about this rising inequality in Indian society. Former Reserve Bank of India Governor D Subbarao has said the “sharpening inequalities” between upper-income segments and lower-income households in the country could affect growth.

“The positive wealth effect of the upper income segments juxtaposed with the negative income effects of the lower income households tells a story of a very uneven recovery and sharpening inequalities. This is morally wrong and politically corrosive,” he told Press Trust of India and added that it will also have a big impact on growth prospects going forward.

Regarding Covid-19’s spread to villages, he said, “We are hearing grim tales of loss of lives and livelihoods. Poor households have run down their savings for medical expenses and, given the weak medical infrastructure in the villages, rural households are also much more uncertain and anxious about the impact of a possible third wave.”