Rain, Relief, and the Return of India’s Consumer: How PL Capital Sees the Festive Demand Wave Building
- 18th July 2025
- 04:00:00 PM
- 4 min read
Mumbai | July 18 – If you’ve spent the last few months watching India’s markets, you’d think the country’s consumer had disappeared.
Muted FMCG volumes, patchy rural demand, and cautious spending have dominated narratives. But under the radar, a set of small shifts are converging, quietly building the case for a different story as India heads into its festival months.
Start with the rain. The monsoon has come in at 106% of its long-period average, with timely distribution across states that matter for rice, pulses, and oilseeds. Kharif sowing is up 11.1% over last year, and water reservoir levels are strong. Food inflation, a persistent irritant for real incomes, turned negative in June for the first time in 18 months.
Add tax relief worth ₹1 lakh crore, filtering into middle-income urban wallets just as borrowing costs ease post-RBI rate cuts. Credit conditions are loosening, even if quietly.
Festivals are approaching. Raksha Bandhan, Ganesh Chaturthi, Onam, Diwali—all of them events where India’s consumer, both rural and urban, typically steps forward.
“The narrative has been stuck on global worries, but the signals in India’s domestic economy are shifting,” says Amnish Aggarwal, Head of Research at PL Capital. “Rain, relief, and the festival calendar create the ingredients for a demand pickup that’s not fully priced in.”
Why This Time Feels Different
The festive season is not new, nor is the hope for a demand revival. But there are reasons to think this year could play out differently:
- Low Base: Last year’s festive demand was softened by uneven rains and higher inflation.
- Real Income Relief: Easing food prices, lower fuel prices, and tax cuts have lifted purchasing power.
- Liquidity Easing: While not yet translating into a full credit boom, lower EMIs are starting to show in entry-level auto and appliance financing trends.
- Sentiment Pockets: Select Tier 2 and Tier 3 markets are seeing improved discretionary spends, particularly where agri-incomes are stabilising.
Where PL Capital Is Watching
PL Capital’s India Strategy notes that while this setup is constructive, the rebound will not be uniform. Instead, it will be granular, category-specific, and regionally diverse.
- Rural FMCG: Categories like personal care and packaged foods may see volume tailwinds as input costs ease.
- Low-Ticket Durables: Fans, coolers, kitchen appliances, and smartphones in Tier 2/3 markets are areas to track.
- Entry-Level Autos: Two-wheelers and compact cars remain the most sensitive to EMI reductions and fuel price stability.
- Jewellery and Apparel: Festivals are structurally linked to gold and clothing demand, with stabilising gold prices adding a tailwind.
- Travel and Domestic Aviation: Forward bookings for festival windows are showing early signs of recovery.
“We are not calling for a broad consumption boom,” Aggarwal says. “But there is room for selective optimism, and the signals we are seeing are better than the headlines suggest.”
Signals to Watch Next
For investors, the opportunity is not in blanket buying but in monitoring the right signals:
- Rural wage trends and mandi prices post-monsoon.
- Pre-festive stocking data from FMCG distributors.
- Early auto booking and financing data.
- Footfall and spending metrics in organised retail.
- Airline booking patterns during festival weeks.
Why It Matters
India’s markets have priced in global uncertainties and policy shifts. What they haven’t fully priced in is a domestic consumption recovery if the signals persist.
The market may stay cautious until these trends translate into earnings, but for investors with a 6-12 month lens, this phase is about preparing for surprises, not reacting to them.
PL Capital’s India Strategy continues to focus on identifying these pockets of demand, aligning portfolios with businesses best positioned to capture incremental gains without overpaying for momentum.
Bottom Line
Rain, relief, and a festival calendar are aligning. India’s consumer story is not booming, but it is quietly rebuilding momentum. For investors, this is the time to watch, prepare, and position selectively—not to sleep on what could be one of India’s more overlooked themes as the year closes out.
Read the full India Strategy report here
For a conversation on aligning your portfolio with India’s evolving demand story, connect with PL Capital today
PL Capital
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.