Accordingly, the ratings agency believes most of the supply-side shocks have softened while they demand for discretionary may take longer than other three buckets namely, 'Industrial, Non-discretionary and Essential'.
"Pharmaceuticals companies will benefit from growth in scale and margin expansion while fertiliser companies are likely to draw benefit from softer raw material prices, relatively stable rupee along with a sustained healthy demand," the ratings agency said in a statement.
"In the Industrial bucket, the fiscal deficit is likely to have a bearing on the engineering, procurement, and construction sector while auto and auto ancillaries are likely to benefit from leaner cost structures and improved credit metrics, though commercial vehicles will see a protracted recovery."
As per the statement, the onus of recovery in 'deep discretionary' falls upon accelerated consumption and improved consumer sentiments.
"The sectors most affected in the 'discretionary' bucket are residential real estate, textile and retail jewellery."
In terms of macro trends, the ratings agency cited that 'Index of Industrial Production' has improved on a year-on-year basis in September 2020 for sectors such as chemical, pharma, metals and motor vehicles.
"The growth in pharma can be attributed to the nature of the operations, since the sector is classified under 'essentials' while the growth in the metal sector has largely been driven by a spike in global demand."
"Concurrently, the trade variables have improved with the increasing exports of vehicles along with base metals and augmented imports of gems & jewellery and fertilisers."