Mumbai: PL Capital, in its latest India Strategy Report, highlights a strong rebound in Indian markets, with the NIFTY delivering 10% returns over the past six weeks amid easing FII selling pressure. Q4FY25 results have exceeded expectations, with EBITDA and PBT (ex-Oil & Gas) beating estimates by 5.1% and 9.2% respectively.
Consumer demand, though subdued recently, is showing early signs of recovery. A normal monsoon, improved agricultural output—6.8% growth in Kharif and 3% in Rabi crops—and water reservoir levels 22% above last year are expected to boost rural demand. Wheat procurement has also surpassed previous records, aiding food price stability.
The FY26 budget’s personal income tax cuts are beginning to stimulate demand, especially among consumers earning over ₹1 million annually. With a 2.5x multiplier effect, this is projected to generate a ₹2,500 billion (USD 30 billion) demand boost. Sectors such as Automobiles, QSR, Consumer Durables, Travel, Apparel, and Jewellery are expected to benefit the most.
Geopolitical tensions are reshaping India’s strategic priorities. "Operation Sindoor" has highlighted the need for advanced defence capabilities, prompting increased investments in drones, missiles, air defence systems, and smart power grids. The suspension of the Indus Water Treaty is expected to unlock significant potential in hydroelectric and PSP projects in Jammu & Kashmir, including Pakal Dul (1000MW), Kiru (540MW), and Ratle (850MW).
With CPI at 3.16% and food inflation at just 1.78%, the environment is ripe for an RBI rate cut—PL Capital anticipates a 50 bps cut in the next six months.
New Conviction Picks: Sun Pharma, Rainbow Children’s Medicare, and Hindustan Aeronautics replace Bharat Electronics, Cipla, Maruti Suzuki, Aster DM Healthcare, and Kaynes Technology India.
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