The risk of a second pandemic wave in India has risen materially as Covid-19 cases are rising in states outside Maharashtra, said global brokerage firm Nomura. The increased caseload could lead to near-term growth concerns and delay market expectations on the timing of policy normalization, it said in a report on Wednesday. However, this would have limited medium-term implications as the vaccination drive progressed and easier financial conditions act as tailwinds to the economy, the report said.

“We expect only marginal negative growth effects, because government restrictions are less stringent, the goods sector continues to chug along and households and businesses have adjusted to the new normal,” said Nomura economists Sonal Varma and Aurodeep Nandi in the report.

Daily cases are expected to rise over the coming months as the trend of increasing infections spread to states like, Uttar Pradesh, Gujarat, Madhya Pradesh, Haryana, Tamil Nadu, Chhattisgarh, Karnataka, Delhi, West Bengal and Punjab apart from Maharashtra.