India’s slowdown is touching the untouchable

Slow-moving. India's biggest companies longer offer a rose-tinted window onto world's fifth-largest ecomy. Shoppers have been tightening ir purse strings for years. w austerity is spreing from rural poor to urban rich. That is opposite of recovery story that was supposed to play out.

GDP is growing at 6.7% but reality is that consumption has been weak in India since at least 2020. Income growth is anaemic: casual and regular workers in 2023 earned a monthly w 1% lower than in previous year, per an International Labour Organization report based on government data. For a while, big companies that dominate country's stock benchmarks like Nifty 50 Index seemed well insulated.

latest set of company earnings suggest orwise. Hindustan Unilever 's net profit fell 2% year-on-year for three months ended September. Reliance Retail - a unit of $215 billion Reliance Industries - reported a 1% drop in revenue in same quarter and shrank store by 2% from its June level; boss Mukesh Ambani 's execution on strategy looks as much of a problem as a softening ecomy. Shoppers Stop, an upscale department store, logged its second straight quarter in red. list goes on.

hope was always that incomes of poor who were buying fewer biscuits would improve. Inste, urban demand is showing weakness too - sales of fast-moving consumer goods groups in cities are growing at nearly one-fifth of last year's rate - just as rural sales inch up from a prolonged slump.

India's festival season is usually a time people spend but carmakers struggled to clear inventory in run up to Diwali holiday last week: Revenue growth at Maruti Suzuki , country's top carmaker by sales, crawled at its slowest pace in three years during September quarter. Even luxury marque BMW is slashing prices; discounts could get bigger going forward, Times of India reported on Oct. 28, citing unnamed industry analysts.

Nearly half of top 100 listed firms that have reported earnings for September quarter missed estimates by more than 4%, highest since March 2020, according to Venugopal Garre and his colleagues at Bernstein. Garre says companies are t ackwledging " elephant in room" and are hoping slowdown is a one-off amaly. For country's eye-wateringly expensive equities - MSCI India is valued at more than 23 times earnings - that sets up a lot of potential pain.

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Diwali, a major holiday, was celebrated in India on Oct. 31 and v. 1.