The Silent Revolution
We’ve highlighted the consumption revival thesis. The seeds were sown gradually — income tax cuts, lower interest rates, and state welfare schemes have all boosted disposable incomes. Two consecutive good monsoons lifted rural income, while deflation in key commodities like tea, coffee, vegetables, and staples eased household inflation.
Together, these built the foundation for India’s consumption upcycle. And with the recent GST rate cut, the switch has finally been flipped. It’s the quiet revolution India needed.
We Indians are natural value seekers — and what’s better than a ~10% cut in prices overnight? Early signs suggest the floodgates have opened, and consumers are splurging again.
From Narrative to Numbers
After a few quarters of waiting, the revival narrative is finally showing up in the data. Media reports, dealer interactions, and quarterly updates from consumer companies all point to strong momentum.Navratri sales are the highest in a decade, as per media. Small car bookings for India’s largest automaker are up 50%, as reported in the media, during the navratri period. Commentary from electronic retail chains indicates over 20% growth in consumer durables during the same period. Initial festive sales in e-commerce and quick-commerce channels remain strong. Value fashion retail players are reporting 20–90% growth in Q2, while real estate demand remains robust. System credit growth is also inching up.Some categories may still be adjusting to short-term channel disruptions, but this consumer exuberance is spreading fast — and will likely cascade into other segments soon.
When everything looks perfect, valuation bargains disappear
Despite all this, consumption stocks as a group haven’t moved much. Auto stocks have seen some traction, but the broader consumption index is down over the past month.
Why is the market ignoring this turnaround?
Markets, like people, aren’t immune to cognitive biases. Recency bias keeps investors anchored to the last three years — a period when the consumption economy struggled, while the capex cycle roared back to life. That performance gap still lingers in investors’ minds, even as the government’s policy focus clearly shifts from capex to consumption.
Add to that salience bias — the tendency to focus on loud headlines (US tariffs, FII exits, market volatility) while missing quieter signals. Meanwhile, many quality consumption companies still trade below their 5–10-year average multiples.
But as financial performance shows up in its entirety, the market will catch up. Stock prices will eventually align with the intrinsic value of the business.
In investing, as in life, the market rewards anticipation, not reaction.
By the time it’s obvious, it’s over.
And right now, Indian consumption is at that moment — early but already stirring.
(The author Nimesh Chandan is CIO, Bajaj Finserv AMC)