INSUBCONTINENT EXCLUSIVE:
season cheer are likely to be dashed by a slowing economy.More than 60 per cent 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.The country'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 Diwali in October.But this time, the outlook for the period is subdued after the 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 has dropped more
than 10 per cent 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," said Mr Mehta of Samco.Automakers have been among the worst
hit by the slump in demand, with monthly auto sales in the country down 17-20 per cent since April
Preliminary data shows overall car sales in the country may have dropped as much as 30 per cent in July.Tata Motors, the country's top
automaker by revenue, posted a bigger-than-expected loss for the June quarter
Rival Maruti Suzuki, which managed to top estimates aided by cost cuts, saw an 18 per cent drop in sales.Gopal Mahadevan, finance head at
truck maker Ashok Leyland, has said the lower auto sales have "more to do with the general economic condition" and not a demand
problem.Among the few bright spots for the quarter was Johnny Walker and Smirnoff maker Diageo, which reported an 8 per cent rise in sales
in the country, led by strong demand for scotch
Its subsidiary, United Spirits, posted a near 10 per cent rise in sales."The lipstick effect, which indicates consumers spend more on
low-ticket luxury and instant gratification items during a crisis, could be at play here," said Gnanasundaram Saminathan, a research analyst
at Spark Capital Advisors.Get Breaking news, live coverage, and Latest News from India and around the world on TheIndianSubcontinent.com
Catch all the Live TV action on TheIndianSubcontinent 24x7 and TheIndianSubcontinent India
Like us on Facebook or follow us on Twitter and Instagram for latest news and live news updates.
