Latest news with #RahulBajoria
Time of India
5 days ago
- Business
- Time of India
Main target will be growth, not prices; RBI rate cuts unlikely soon: Economists
Mumbai: A majority of economists say that growth, rather than inflation, will be the primary driver of monetary policy decisions while adding that the Reserve Bank of India is unlikely to cut the policy repo rate further from 5.5% now. "We believe that growth would guide the RBI's thought process as inflation remains benign. We do not see any further cuts in our base case," Rahul Bajoria and Smriti Mehra, economists at BofA Securities India, wrote in a report. Inflation as measured by consumer price index fell to 1.55% in July-the lowest since June 2017 and well below the central bank's inflation target range of 2-6%, data released on Tuesday showed. The RBI's monetary policy committee (MPC) has reduced the repo rate by 100 bps since February, but left it unchanged at 5.5% last week. The MPC's next decision will be announced on October 1. The central bank reduced CPI forecast for the current financial year by 60 basis points but retained GDP growth forecast at 6.5%. Economists said there would be a rate cut only if the 50% US tariffs on India significantly impact growth. "Given the inflation outlook, the RBI has room to cut rates further by 25-50 bps in case there is evidence that growth is slowing down significantly due to tariff shocks," said Sakshi Gupta, principal economist at HDFC Bank . "For now, we do not expect further rate cuts." HDFC Bank has retained the GDP growth estimate at 6.3% due to likely offsetting factors and on the possibility that the US tariffs could be negotiated down, she said. Sameer Narang, head, economic research group at ICICI Bank , does not see any rate cut from RBI if growth remains sustainably above 6%. "As of now, we foresee growth at 6.3% which also does not call for any more rate cuts. However, if downside risks to growth are visible because of external headwinds, then easing may again be on the table," he said. Economists said the June quarter GDP data, due for release on August 29, will be keenly watched for cues on the RBI's rate action. However, this data will not include the impact of tariffs as the US duties came into effect this month. Even as the consensus view is inclined towards 5.5% as the terminal repo rate, a few economists expect further reduction. Economists at HSBC India believe that if some of the weak high frequency data from June continue, the RBI can mark down its growth forecast and deliver a 25 basis point rate cut in the fourth quarter of 2025, taking the repo rate to 5.25%. Nomura sees 5.00% as the terminal rate as it expects 25 bps cut each in October and December policy meetings. "The MPC's data-dependent approach has left the door open to future cuts, even if it did not explicitly signal one," it said.
Time of India
24-06-2025
- Business
- Time of India
Big $40 billion consumption boom on the horizon! Tax cuts, cheaper loans & 8th Pay Commission to drive new wave - what sectors should investors bet on?
According to HSBC's analysis quoted in the report, India's current discretionary spending stands at approximately $250 billion. (AI image) India is on the verge of a consumption boom - one that could potentially lead to an annual boost of $30–40 billion! A substantial consumer spending surge of $40 billion is poised to impact India's economic landscape. This significant development, expected to materialise within the next 18 to 24 months, could present a notable opportunity for stock market investors. India's vast population of 1.5 billion, coupled with increased disposable income from income tax reductions, salary increases and reduced borrowing costs (thanks to RBI's 1% repo rate cut), positions this consumer spending wave as particularly noteworthy. According to an ET report quoting HSBC Securities, analysts project yearly discretionary spending increases ranging from $30-40 billion. The calculations are straightforward: Tax reductions for individuals are projected to generate $12 billion in additional savings. The anticipated 8th Pay Commission's 15% salary enhancement could provide government and defence personnel with an extra $18-26 billion. Combined with $3-4 billion in mortgage payment reductions due to lower interest rates, this creates a substantial boost to consumer spending potential. According to HSBC's analysis quoted in the report, India's current discretionary spending stands at approximately $250 billion. The stimulus could enhance spending capacity by roughly 15%, which will be funds in consumers' hands. Whilst some individuals might opt to save or invest these gains, market analysts predominantly anticipate that a significant portion will be directed towards consumption. According to BofA Securities' Rahul Bajoria, India's consumption indicators show promising signs of improvement, supported by ongoing policy measures. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Giao dịch CFD với công nghệ và tốc độ tốt hơn IC Markets Undo With controlled inflation, front-loaded monetary easing, and reduced commodity prices helping with input costs, conditions appear favourable. Despite private consumption growth declining alongside GDP, Bajoria anticipates consumption to exceed GDP growth soon, driven by stabilising household incomes, reduced tax burdens and better credit accessibility. BofA projects significant strengthening of real wages in rural India, supported by low food inflation and steady income patterns, the ET report said. The monetary policy adjustments, including rate reductions of 100 basis points, liquidity enhancement exceeding Rs 12 lakh crore, and relaxed regulatory requirements for NBFCs and MFIs regarding risk weights, are collectively positioned to boost urban demand. Bajoria notes that personal credit growth, previously hindering consumption, is expected to show substantial improvement in upcoming quarters. Road Ahead for Investors To Make The Most Of Consumption Boom BNP Paribas' Kunal Vora identifies emerging opportunities in consumer sectors, particularly in food delivery and quick commerce. The food delivery sector has evolved into a sustainable duopoly following years of intense rivalry. Vora identifies Swiggy and Eternal as primary beneficiaries, anticipating substantial cash flow generation and increased participation in India's $1 trillion retail market, the report said. HSBC's Yogesh Aggarwal observes that whilst specific sector impacts remain uncertain, Indian consumers are increasingly adopting higher spending patterns. This includes vehicles, consumer products, electronic items, and recreational activities such as restaurant dining. The significance lies in the widespread nature of this consumption growth, spanning various product categories and consumer income levels. Valuations present an additional consideration. Nomura indicates that consumer equities have experienced significant corrections over six months, currently trading below their five-year averages by one standard deviation. Whilst previous consumption decline led to corporate earnings revisions, government initiatives focusing on demand stimulation through fiscal and monetary measures are demonstrating positive outcomes. According to ET, Nomura anticipates that reduced inflation and GDP growth, supported by FY26 tax reductions, will boost volume recovery and enhance margins, particularly as raw material costs decrease. They favour GCPL, Marico and Tata Consumer, organisations demonstrating robust pricing, premium offerings, innovation and strong brand value. Rural consumption is experiencing a revival. Incred Equities notes a significant 3.3% uptick in rural consumer confidence in May 2025, attributed to profitable rabi crop yields, early monsoon onset, and positive kharif season predictions. Reduced fuel costs and RBI's interest rate reductions have harmonised urban-rural consumer sentiment. Trideep Bhattacharya of Edelweiss Mutual Fund observes favourable conditions emerging. With declining inflation, improved liquidity, and budget provisions offering urban consumers a 5-7% income increase, he anticipates a significant shift in consumption during the latter half of the year, considering it a surprising performer of 2025. His fund introduced a consumption-focused strategy earlier this year. While essential goods have underperformed due to mass-market demand constraints, discretionary segments are showing recovery signs, the report said. For investors, the crucial $40 billion consideration isn't about the certainty of consumption growth but rather their readiness to capitalise on it. Economic indicators are positive, liquidity conditions are favourable, and growth prospects appear sustainable. The previous occurrence of such aligned factors resulted in substantial returns from Indian consumption stocks, suggesting potential similar outcomes. Stay informed with the latest business news, updates on bank holidays and public holidays . 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Time of India
24-06-2025
- Business
- Time of India
$40 billion consumption boom coming soon! Is your stock portfolio ready to ride it?
A $40 billion demand bomb is ticking quietly beneath the surface of India's economy. And when it explodes over the next 18 to 24 months, it could be the next big theme for stock market investors . With nearly 1.5 billion mouths to feed and wallets fattened by tax cuts , pay hikes, and cheaper loans, the timing of this consumption wave could be as significant as its size. Analysts at HSBC Securities peg the annual boost to discretionary consumption between $30–40 billion. The math stacks up quickly: lower personal taxes alone are expected to free up $12 billion in savings. If the 8th Pay Commission delivers its anticipated 15% salary hike, another $18–26 billion could land in the hands of government and defence employees. Add $3–4 billion in mortgage savings from falling interest rates, and you're looking at a consumption cocktail strong enough to stir the markets. This isn't just theoretical liquidity. HSBC's research estimates India's discretionary spending base at about $250 billion, meaning the upcoming stimulus could increase spending capacity by nearly 15%, a jolt of real money in real hands. While a portion of the gains may be saved or invested, the prevailing view among analysts is clear: a large share will flow into consumption. Rahul Bajoria of BofA Securities says there are growing signs that consumption indicators in India are poised to improve as policy support continues to build. Inflation remains tame, monetary easing has been front-loaded, and low commodity prices are cushioning input costs. Even though overall private consumption growth has slowed in line with GDP, Bajoria believes it will soon outpace GDP as household incomes stabilize, tax burdens decline, and credit availability improves. BofA expects real wages, especially in rural India, to materially strengthen, thanks to low food inflation and stable income trends. The cumulative 100 basis points of rate cuts delivered so far, liquidity easing of over Rs 12 lakh crore, and regulatory rollbacks on NBFC and MFI risk weights are all lining up to reignite urban demand. Bajoria also highlights that personal credit growth, which had been a major drag on consumption, is set to improve meaningfully in the coming quarters. Also Read | Rs 1 lakh crore FII selloff in 6 sectors! Are you still holding the wrong stocks? What should investors do? Yogesh Aggarwal at HSBC points out that while it's hard to pinpoint which sectors will benefit most, the average Indian consumer is clearly heading toward a higher-spending mode. This includes automobiles, consumer goods, electronics, and out-of-home categories like dining. According to him, the broad-based nature of this consumption revival is what makes it powerful as it isn't limited to a niche, but cuts across multiple product baskets and income segments. Kunal Vora of BNP Paribas notes that scalable consumer opportunities are finally emerging, especially in the food delivery and quick commerce space. After years of aggressive competition, the food delivery industry is now a functional duopoly with viable economics. Vora sees Swiggy and Eternal as key beneficiaries of this consumption re-rating, with both poised to generate significant cash flows and capture a larger share of India's $1 trillion retail opportunity. There's also a valuation argument in play. Nomura points out that consumer stocks have already corrected meaningfully over the last six months and are now trading a full standard deviation below their five-year averages. The recent consumption slowdown had pushed many companies into earnings downgrades, but the administration's renewed focus on demand revival via fiscal and monetary levers is now beginning to show results. Also Read | Nirmala Sitharaman backed consumption over capex. But guess who's making billions Nomura believes inflation moderation and GDP recovery, aided by the FY26 tax cut, will support volume recovery and improve margins, particularly as raw material softness filters through to the bottom line. Its preferred names include GCPL, Marico and Tata Consumer—firms that are showing strength in pricing, premiumisation, innovation, and brand equity. Rural India is also joining the consumption comeback. Incred Equities highlights a sharp 3.3% rebound in rural consumer sentiment in May 2025, driven by solid returns from rabi crops, early monsoon arrival, and bullish forecasts for the kharif season. Easing fuel prices and RBI's rate cuts have added to the urban-rural alignment of consumer confidence. At Edelweiss Mutual Fund, Trideep Bhattacharya says the pieces are finally falling in place. Inflation has dropped, liquidity has eased, and the budget has effectively handed urban consumers a 5–7% income boost. He believes the second half of the year will mark a decisive turn in consumption, calling it the dark horse of 2025. His fund launched a consumption strategy earlier this year based on this thesis. While staples have lagged due to pressure on mass-market demand, discretionary categories are already showing signs of a turnaround. For investors, the $40 billion question isn't whether this consumption surge will happen but whether they're positioned to ride it. The macro tailwinds are visible, the liquidity is real, and the runway looks unusually long. The last time this many levers were aligned, Indian consumption stocks delivered multibagger returns. History might not repeat but could rhyme with compounding. ( Disclaimer : Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
Economic Times
12-06-2025
- Business
- Economic Times
What will drive CPI lower in FY26? Rahul Bajoria explains
Rahul Bajoria, MD, BofA, says the new CPI series is expected to moderate food inflation's influence. Core inflation might see a slight increase. Headline inflation's volatility could decrease, though average inflation may persist due to rising per capita incomes and service consumption in India. Forecasting monthly inflation fluctuations might become simpler, reducing reliance on volatile food prices. Help us with your expectation regarding the CPI print and what do you think will drive the CPI lower for FY26? Rahul Bajoria: We are broadly in line with where the market is expecting inflation to be around 3% on headline, with core inflation likely to outstrip it by about 4.2% as well. The core message for us from the inflation trends in the recent months has been that food inflation which was really the problem in the last three years, appears to have finally been addressed with supply augmentation being quite visible, buffer stocks being quite good and then perishable prices particularly vegetables not really going through the typical seasonal pickup that we see in the summer months. All of this is coming together to put a dampener on inflation trends which is a very welcome news and it does kind of provide RBI a lot of leeway as far as their policy conduct is concerned and also probably helps consumer spending at the margin as we just put out this morning. We think that consumer spending will be a big beneficiary of low inflation trends which are likely to stay with us for the next three to six months as well. What is your take on the RBI's reduction of inflation for overall FY26 because in the April meet, they had pegged this at 4%. In their last hearing, it has come down to 3.7%. What are you making of this reduction from the RBI for the overall FY26 CPI print? Rahul Bajoria: This is broadly in line with what we are also expecting. We had reduced our inflation forecast just a month ago to 3.8%. To be honest, we are tracking it a little bit lower at this point, but you can never rule out some seasonal pickup in food prices later on, I mean, that is just the nature of the beast. But the core message that we took away was that inflation is essentially seen as quite under control in the current environment. Remember,we have not even seen any material pass through of lower energy prices into our retail fuel prices. So there is a fair amount of wiggle room that both the government and the RBI enjoys as far as inflation management for this year is concerned and so this does allow the central bank to really focus on reviving growth which seems to be the number one priority as things stand as far as policy conduct is concerned. Along with that, we are seeing good moves on the commodity side because given the fact that just yesterday, there was a great move on crude oil prices, even gold is seen as inching higher. What levels of crude oil and gold prices are you factoring in for your CPI projections? Rahul Bajoria: We took an average estimate of around $75 a barrel, which is a lot higher than where it is. But we need to distinguish between what is the actual price of oil and what is the pass through, that goes on, because what we have seen in the past cycles in the last few years is that the government does not necessarily pass it on as far as the benefit of lower oil or the problems of higher oil prices are concerned. We are in a very stable price regime as far as gasoline and diesel prices are concerned with a bias for it to move lower if lower oil prices persist. As for gold, we are expecting gold prices to move up. Our in-house forecasts are for gold to be around $4,000 per ounce by the end of this year which is in line with a view also that the dollar will probably weaken. But it is a bit of a double-edged sword as far as India is concerned because Indian households tend to have very high levels of gold, but it is also something that influences inflation at the margin. While we are talking about some factors that could affect CPI projections, how much will monsoon distribution impact the supply and what is going to be the food inflation prediction from your end? Rahul Bajoria: At this juncture, that is the biggest source of uncertainty. It always tends to be in the early parts of the monsoon cycle. What we are factoring in looking at the IMD projections is that availability of water, which probably is the most important factor and from a medium-term perspective, is not going to be a problem. We think food inflation should by and large move in line with the seasonal trends that we have seen in previous cycles when rainfall has been adequate. What we are watching out for is the impact of any excessive rainfall (since monsoon arrived a little bit early) has on the perishable price cycle because we could see supply damage, you could see a little bit of an incentive not to grow certain types of vegetables and that can have some impact on cyclical price trends. But overall, food inflation is going to be by and large under check for this particular year and some mean reversion is expected in the next year. But that is a problem only to be worried about maybe 12 months down the line. The new CPI series is expected to be published from the first quarter of 2026. Help us understand what changes do you expect? Rahul Bajoria: The impact of the new series is likely to dampen the impact of food inflation at the margin and core inflation is likely to become a little bit bigger. I am expecting it to probably reduce the volatility of headline inflation at the margin, but it may not necessarily lower the average inflation levels that we have seen mainly because as India's per capita incomes are growing, there is greater consumption of services, and durable goods tend to be less volatile in prices but their rate of inflation also tends to be a lot more sticky. My sense is that it will actually dampen the volatility that we typically see in headline inflation either from a sequential or from a base effect standpoint. But it may not necessarily lower the rate of inflation. It may not have a huge impact as far as policy deliberations are concerned, but it might become a little bit easier to forecast month-to-month gyrations which right now are very subjective to food price changes which tend to have a disproportionate impact in the way inflation forecasts are done. You Might Also Like: Nomura sees lower inflation in FY26 at 3.3%
Time of India
12-06-2025
- Business
- Time of India
What will drive CPI lower in FY26? Rahul Bajoria explains
Rahul Bajoria , MD, BofA , says the new CPI series is expected to moderate food inflation's influence. Core inflation might see a slight increase. Headline inflation's volatility could decrease, though average inflation may persist due to rising per capita incomes and service consumption in India. Forecasting monthly inflation fluctuations might become simpler, reducing reliance on volatile food prices. Help us with your expectation regarding the CPI print and what do you think will drive the CPI lower for FY26? Rahul Bajoria: We are broadly in line with where the market is expecting inflation to be around 3% on headline, with core inflation likely to outstrip it by about 4.2% as well. The core message for us from the inflation trends in the recent months has been that food inflation which was really the problem in the last three years, appears to have finally been addressed with supply augmentation being quite visible, buffer stocks being quite good and then perishable prices particularly vegetables not really going through the typical seasonal pickup that we see in the summer months. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like If You Eat Ginger Everyday for 1 Month This is What Happens Tips and Tricks Undo Play Video Pause Skip Backward Skip Forward Unmute Current Time 0:00 / Duration 0:00 Loaded : 0% 0:00 Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 1x Playback Rate Chapters Chapters Descriptions descriptions off , selected Captions captions settings , opens captions settings dialog captions off , selected Audio Track default , selected Picture-in-Picture Fullscreen This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Opacity Opaque Semi-Transparent Text Background Color Black White Red Green Blue Yellow Magenta Cyan Opacity Opaque Semi-Transparent Transparent Caption Area Background Color Black White Red Green Blue Yellow Magenta Cyan Opacity Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Drop shadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. All of this is coming together to put a dampener on inflation trends which is a very welcome news and it does kind of provide RBI a lot of leeway as far as their policy conduct is concerned and also probably helps consumer spending at the margin as we just put out this morning. We think that consumer spending will be a big beneficiary of low inflation trends which are likely to stay with us for the next three to six months as well. What is your take on the RBI's reduction of inflation for overall FY26 because in the April meet, they had pegged this at 4%. In their last hearing, it has come down to 3.7%. What are you making of this reduction from the RBI for the overall FY26 CPI print? Rahul Bajoria: This is broadly in line with what we are also expecting. We had reduced our inflation forecast just a month ago to 3.8%. To be honest, we are tracking it a little bit lower at this point, but you can never rule out some seasonal pickup in food prices later on, I mean, that is just the nature of the beast. But the core message that we took away was that inflation is essentially seen as quite under control in the current environment. Remember,we have not even seen any material pass through of lower energy prices into our retail fuel prices. So there is a fair amount of wiggle room that both the government and the RBI enjoys as far as inflation management for this year is concerned and so this does allow the central bank to really focus on reviving growth which seems to be the number one priority as things stand as far as policy conduct is concerned. Along with that, we are seeing good moves on the commodity side because given the fact that just yesterday, there was a great move on crude oil prices, even gold is seen as inching higher. What levels of crude oil and gold prices are you factoring in for your CPI projections? Rahul Bajoria: We took an average estimate of around $75 a barrel, which is a lot higher than where it is. But we need to distinguish between what is the actual price of oil and what is the pass through, that goes on, because what we have seen in the past cycles in the last few years is that the government does not necessarily pass it on as far as the benefit of lower oil or the problems of higher oil prices are concerned. Live Events You Might Also Like: Aurodeep Nandi on why Nomura is pencilling in 2 more rate cuts by December We are in a very stable price regime as far as gasoline and diesel prices are concerned with a bias for it to move lower if lower oil prices persist. As for gold, we are expecting gold prices to move up. Our in-house forecasts are for gold to be around $4,000 per ounce by the end of this year which is in line with a view also that the dollar will probably weaken. But it is a bit of a double-edged sword as far as India is concerned because Indian households tend to have very high levels of gold, but it is also something that influences inflation at the margin. While we are talking about some factors that could affect CPI projections, how much will monsoon distribution impact the supply and what is going to be the food inflation prediction from your end? Rahul Bajoria: At this juncture, that is the biggest source of uncertainty. It always tends to be in the early parts of the monsoon cycle. What we are factoring in looking at the IMD projections is that availability of water, which probably is the most important factor and from a medium-term perspective, is not going to be a problem. We think food inflation should by and large move in line with the seasonal trends that we have seen in previous cycles when rainfall has been adequate. What we are watching out for is the impact of any excessive rainfall (since monsoon arrived a little bit early) has on the perishable price cycle because we could see supply damage, you could see a little bit of an incentive not to grow certain types of vegetables and that can have some impact on cyclical price trends. But overall, food inflation is going to be by and large under check for this particular year and some mean reversion is expected in the next year. But that is a problem only to be worried about maybe 12 months down the line. The new CPI series is expected to be published from the first quarter of 2026. Help us understand what changes do you expect? Rahul Bajoria: The impact of the new series is likely to dampen the impact of food inflation at the margin and core inflation is likely to become a little bit bigger. I am expecting it to probably reduce the volatility of headline inflation at the margin, but it may not necessarily lower the average inflation levels that we have seen mainly because as India's per capita incomes are growing, there is greater consumption of services, and durable goods tend to be less volatile in prices but their rate of inflation also tends to be a lot more sticky. You Might Also Like: RBI lowers inflation forecast, but retains growth forecast My sense is that it will actually dampen the volatility that we typically see in headline inflation either from a sequential or from a base effect standpoint. But it may not necessarily lower the rate of inflation. It may not have a huge impact as far as policy deliberations are concerned, but it might become a little bit easier to forecast month-to-month gyrations which right now are very subjective to food price changes which tend to have a disproportionate impact in the way inflation forecasts are done. You Might Also Like: Nomura sees lower inflation in FY26 at 3.3%
