Weak Industrial Production Suggests A Crack In India Consumer Story, Says Nomura

India's consumption story seems to be showing cracks, as production of white goods take a beating. This according to a report by Nomura Research.

"Consumer durables production has been underperforming other sectors, with only 1% year-on-year growth in September versus 5.8% in August," Nomura Research said in a note last week.

Adjusting for seasonal and base effects in the sector, Nomura India Normalization Index showed that consumer durables is not only trailing other sectors, but also trending below pre-pandemic levels. The NINI is indexed to pre-pandemic level, which is 100.

September's Index of Industrial Production showed a slower than expected growth of 5.8%. The consensus estimate for September IIP was 7%, while Nomura estimated it at 7.2%.

"In our view, this speaks to weaker discretionary demand among consumers," Aurodeep Nandi and Sonal Varma said in the note.

Nomura further highlighted the weak growth impulses facing India.

"While GDP growth is likely to remain strong in Q3, we are cautious of headwinds from weaker rural demand, a likely slowdown in government capex and spillovers from sluggish global growth," the analysts said.

The research house estimates gross domestic product growth of 6.3% in the current fiscal and 5.5% for FY24.