New Delhi: Persistently weak urban demand can weigh heavy on fast-moving consumer goods (FMCG) companies in the October-December financial quarter, reports Business Standard.
The paper notes that the situation can be alleviated with price hikes – something which does not augur well for the consumer.
The report quoted HDFC Securities’ note on how the macro environment has “remained subdued” and how that has led some companies to undertake corrections in their inventory.
Reliance, the report noted, which is the largest modern trade player, has taken up “significant” inventory optimisation measures.
Among reasons behind this are rising agricultural commodities prices – barring skimmed milk powder and sugar – which affect margins of packaged goods firms.
Companies have had to hike prices of soaps, coffee, tea and edible oils.
In a report, Indian Express has observed how foreign portfolio investors have offloaded Rs 4,285 crore of domestic equities on a net basis in the first three trading days of the new year.
One of the reasons behind this is cited as caution before corporates release third quarter results.
Other factors are a strong dollar and higher US bond yields.
The Congress’s veteran leader Jairam Ramesh said today that the private sector’s reluctance to invest in India is a “corporate motion of no-confidence in the Narendra Modi government.”
Ramesh highlighted also how net foreign direct investment or FDI fell to a 12-year low in April-October 2024.
Ramesh wrote on X:
“The investment environment in India has been sluggish in the Modi decade. Gross Fixed Capital Formation has fallen from an average of 32% of GDP during Dr. Manmohan Singh’s Prime Ministerial decade to consistently being below 29% of GDP in the last ten years.
“Investment is sluggish because mass consumption is not accelerating, tax and other authorities are threatening and intimidating business, and because of the growing perception that only 4-5 business groups can grow in the Modi regime.
“Now comes fresh evidence of the private sector’s reluctance to invest in India under this Government –
“* Net foreign direct investment (FDI) fell to a 12-year low in April-October this year
“* Gross FDI inflows have stagnated
“* Indian firms are increasingly choosing to invest abroad rather than at home
“This is a corporate motion of no confidence in the Modi Government. FDI is certainly very important. But more fundamental is DI–Domestic Investment. How to stimulate and sustain DI has to be the central concern of the Union Budget to be present 26 days from today.”
