Urban Consumption Likely To Pick Up From Next June Quarter: JM Financial’s Damania

Urban consumption is likely to increase from the first quarter of the next financial year after exhibiting a sluggish trend in the current fiscal, according to Anish Damania, managing director and chief executive officer (institutional equities and ECM), JM Financial Institutional Securities Ltd.

Speaking to NDTV Profit on the sidelines of the JM Financial India Conference 2024, Damania said that urban consumption will take some more time to pick up. The dwindling urban consumption and rural demand so far in the current fiscal have remained a cause of concern for companies across sectors, especially for FMCG players.

“Consumption has come about as a slow trend, and that is now visible everywhere. It will need some time to pick up. We will start seeing a pickup in urban consumption probably from next year's first quarter onwards,” the analyst added.

He also emphasised that more investment is also needed for the consumption to increase.

“I guess it also needs more investment from both corporates and the government, which I think in the second half we will start seeing,” he noted.

He further predicted that while the first half of FY 202-2025 was not that good, second half could be better.

“My sense from whatever I hear is that the first half was not that great but the second half is expected to be a lot better. I think the key things that are coming about is a talk on government spending which was muted in the first half because of elections and all of that will come through in the second half,” Damania said.

While there has been a correction in the market, Damania pointed out that companies across many sectors have shared positive commentaries.

“Most of the good talk that is happening is from those in the manufacturing space. Most of the positive corporate commentary is from firms who are involved in manufacturing such as pharma, precision equipment, capital goods, normal products, manufactured items made out of steel and aluminium, castings, automobile components, and chemicals,” he said.

The analyst explained that several factors were at play behind the fall in the markets in the first half of the year.

“One is that there was a lot of euphoria till about two months back and that kept the prices higher and despite the earnings disappointment in that quarter, markets went up. I guess, now as there was another quarter of disappointments in earnings, markets had to correct,” he said.

Damania also noted that consumption slowdown and FII outflows had spooked the markets.

“A combination of all of that had a large correction especially in the small and midcaps and a moderate correction in the largecaps,” he explained.