"The sharp rise in infections will disrupt earnings, recovery recorded by companies over the past six months," it said while adding that prolonged and wider lockdown will have a more severe effect on earnings recovery.
However, the ratings agency sees limited impact of second wave lockdowns on economic activity so far.
Moody's further said restrictions on movement and lockdowns in several parts of the country will lead to a weaker consumer sentiment and will hit housing and automobile sales.
“Housing and car sales will decline sequentially in the June quarter but will likely recover once infections subside. Reduced mobility will weaken transportation-fuel demand and lower refiners' capacity utilisation. Global demand could prompt Indian steel-makers to export their domestic surpluses. A slowdown in construction activity will reduce cement consumption – the growth in FY22 may be lower than our earlier 10 – 12 per cent growth forecast,” wrote Vikas Halan, associate managing director at Moody's in a co-authored report with Sweta Patodia and Kaustubh Chaubal.
It said the slowdown in construction sector will make a dent in cement demand in India and also sees transportation-fuel demand to take a hit temporarily.
The ratings agency said it expects demand for telecom and IT services to remain strong.
Moody’s had last week India’s gross domestic product (GDP) forecast for FY22 to 9.3 per cent from an earlier projection of 13.7 per cent.
India's cases on Monday fell below 300,000 for the first time in almost 26 days, a sign that cases are plateauing in atleast urban pockets of the country. The country recorded 4,106 deaths in the last 24 hours to take total fatalities to 274,390.
 "India Inc, profit margins")