PL Capital, one of the most trusted financial services organisations in India, in its latest India Strategy Report stated that Indian markets, which had been under pressure in recent months due to FII selling, have staged a sharp recovery, delivering a 10% return on the NIFTY over the past six weeks. Q4FY25 results so far have exceeded expectations, with EBITDA and PBT (excluding Oil & Gas) surpassing estimates by 5.1% and 9.2%, respectively.Consumer demand has remained subdued over the past few quarters. Although rural demand picked up following last year’s monsoon, urban demand faced several headwinds — including elections, extreme heat, prolonged monsoons, and a spike in food inflation in September. That said, early signs of recovery are emerging in urban consumption, with a gradual but sustained improvement expected in the coming quarters.In FY25, agricultural production has recorded a growth of 6.8% in Kharif crops and around 3% in Rabi crops. Wheat procurement has reached 29.5 million tonnes, already exceeding last year’s 26 million tonnes—a development that will significantly enhance the government’s ability to control wheat prices during the off-season. Additionally, water reservoir levels in May are 22% higher compared to the same period last year. A normal monsoon is expected to sustain elevated water tables, which will positively impact the next Rabi crop as well.The report further cited that “Operation Sindoor” has showcased a transformative application of advanced air warfare, missile systems, and drone technology, reinforcing the strategic importance of the “Make in India” initiative. As global powers seek to expand their footprint in Southeast Asia, geopolitical uncertainties are expected to intensify. In response to these shifting global dynamics, India will need to significantly ramp up investments in military hardware, space technology, drones, air defence systems, aircraft carriers, smart grids, and power infrastructure. Additionally, the suspension of the Indus Water Treaty is likely to unlock new opportunities across EPC, pumped storage projects (PSPs), and hydroelectric equipment.Budget tax cuts to start reflecting in improved demand: The FY26 budget proposed a reduction in personal income tax rates, and its benefits are now beginning to reach residents. With a favourable base for the next two quarters—given that demand was subdued last year due to elections, severe heatwaves, and a lacklustre wedding season in H1FY25—PL Capital anticipates a pickup in consumption. The combined impact of low inflation, falling interest rates, and a normal monsoon is expected to further support this recovery. Considering the tax cut’s estimated multiplier effect of 2.5x, the resulting demand boost could be around ₹2,500 billion (USD 30 billion).While all consumption segments are likely to benefit, the impact will be more significant among individuals earning ₹1 million annually or more, driving stronger discretionary spending. Though daily-use staples are expected to see moderate growth, the larger upside is likely in Travel, Consumer Durables, QSR, Apparel, Automobiles, Building Materials, and Personal Accessories, including Jewellery.