New Delhi:
With food inflation at its peak and the government trying to accelerate capital expenditure, India's economy is growing steadily and the upcoming Union Budget and Donald Trump 2.0 are key to market returns, a report showed on Monday. Rural demand is showing a sustainable recovery.
According to the PL Capital Group – Prabhudas Lilladher report, the festival and wedding season has boosted demand for travel, jewelry, watches, quick service restaurants (QSR), footwear, apparel and durable goods.
“We are already witnessing an increase in order momentum in railways, defence, energy, data centers etc, the execution of which will accelerate growth in FY26 and beyond,” said Amnish Aggarwal, Director, Institutional Research.
“We expect a growth-oriented budget with an attempt to boost the economy and encourage the middle class to increase spending,” he added.
The Indian investment story, discretionary consumption and financialization are some of the key themes that need to be leveraged for long-term gains.
The retail industry is on the cusp of a major transformation, as fast-paced trading changes the dynamics of not only the grocery sector, but other discretionary segments as well.
“We believe that expansion of high-speed trading in the discretionary and food services segments could cause near-term disruptions in the affected segments and impact profitability,” the report said.
Cement should show better growth and profitability, led by a revival in construction activity and expected price increases. According to the report, the steel industry's fortunes depend on import duties and the development of global prices.
Capital goods and defense should see better order momentum and execution in the coming quarters.
“The budget will be critical for the sustainability of investments, given the likely miss of target expenditure in FY25. However, defence, energy, data centres, railways and energy transition remain a strong theme,” the report said.
As we enter and navigate 2025, agriculture appears to be heading for a good Rabi crop and normal weather patterns should help cool inflation to 4.3-4.7 percent in FY26.
Higher crop production, increase in construction/factory activity and moderating inflation should boost demand from the end of the fourth quarter of FY25, the report said.
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