India's consumer demand rises while stocks remain underperforming, says Srinivasan Sivabalan
Robust demand for goods is not translating into stock market gains as rising input costs and oil prices weigh on margins.
According to the Economic Times, Srinivasan Sivabalan noted that while consumer demand in India is increasing, the stock market is not following the same trend. Companies selling products ranging from jewellery to baby formula are reporting strong demand and raising prices, yet bellwether stocks like Maruti Suzuki India Ltd. and Hindustan Unilever Ltd. have fallen to multiyear lows.
The e-commerce market is projected to reach a record $90 billion in 2026, according to Redseer Strategy Consultants. Businesses such as Titan Co., Nestlé India Ltd., and Dabur India Ltd. are reporting double-digit sales growth, but investors are prioritising profit margins over headline growth.
Sivabalan stated that higher input costs, taxes, and external pressures are impacting margins. India imports almost 90% of its crude-oil needs, and the average profit at companies in the benchmark Sensex index is 11% below forecasts made a year ago, eight months into the Iran war.
Escalating commodity prices are increasing the cost of producing goods like cosmetics and detergents. Sivabalan suggested that the Iran war needs to end before a durable bull market returns and noted that the government and the Reserve Bank of India must work to contain inflation and stabilise the rupee.