Bengaluru
More than 60% of 125 firms that have reported so far, and are tracked by analysts, missed profit forecasts for the June quarter, the most since at least 2016, Refinitiv data shows. India’s biggest lenders and automakers have all sounded warning bells over the slower growth in demand and consumption.
“It’s going to be a gloomy Diwali. Things are not going to change immediately in the next two or three months,” said Umesh Mehta, head of research at Samco Securities. The Indian festive season, which starts in September and runs through the end of the year, is the biggest sales season for companies. It typically peaks around Deepavali in October. But this time, the outlook for the period is subdued after India’s economy grew at the slowest pace in more than four years in the January-March quarter. An erratic monsoon, high rates of unemployment and a liquidity crisis in the shadow banking sector have added to the uncertainty.
“Consumers are currently postponing their purchases because of the general slowdown,” said Neeraj Dewan, director, Quantum Securities. Consumer goods giant Hindustan Unilever has warned demand will “remain subdued given macroeconomic conditions”. The benchmark Nifty index. NSEI has dropped more than 10% since hitting an all-time high in early June and is the fourth-worst performer among its major Asian peers so far this year. “The growth engine is slowing down, which is why we are seeing a sell-off,” Samco’s Mehta said.
Automakers have been among the worst hit by the slump in demand.
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