Jefferies India Strategy Overview:
A split government after the US elections seems to be the base case, which could limit the likelihood of drastic policy changes.
A potential Republican sweep in the elections could result in significant policy shifts.
A victory for Donald Trump could accelerate the “China+1” strategy, benefiting emerging markets, especially sectors like chemicals and cables.
Fossil fuel sectors, such as coal and thermal power, would also benefit from a Trump win.
Some sectors, such as select autos, could be negatively impacted.
A stronger USD (if Trump wins) would be negative for Foreign Portfolio Investment (FPI) flows.
CLSA View on the Auto Sector:
Retail growth during the festive season led to an inventory correction, and dealers are optimistic about double-digit growth for two-wheelers (2Ws) in FY25, along with mid-single-digit growth for passenger vehicles (PVs).
Retail sales for both 2Ws and PVs surged in the second half of October, driven by the festive season.
Discounts remain at September 2024 levels, and inventory levels for both 2Ws and PVs have normalized.
The marriage season in November-December is expected to further drive retail sales for both PVs and 2Ws.
Discount levels are expected to stay unchanged compared to September and October.
Top picks in the auto sector are Mahindra & Mahindra (M&M) and Maruti Suzuki.
Nomura’s Insights on India’s Consumption Sector:
Demand remains strong in rural areas and tier-2/tier-3 cities.
Urban metros and industrial demand are showing weakness.
Overall results in the sector appear mixed.
“Hard” data indicates stability but not significant growth.
A cyclical slowdown is underway, signaling that India’s economy has entered a phase of cyclical growth moderation.
Leading growth indicators suggest that GDP growth could further moderate in the near future.
