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Business News/ Markets / Stock Markets/  India Q2 GDP data due on Thursday; how can it impact the market?

India Q2 GDP data due on Thursday; how can it impact the market?

India's Q2 GDP data is expected to show some moderation, but it is unlikely to significantly impact market sentiment, according to market experts.

Barclays believes India’s GDP in Q2FY24 expanded by 6.8 per cent year-on-year. AFP PHOTO/ Indranil MUKHERJEE (AFP)Premium
Barclays believes India’s GDP in Q2FY24 expanded by 6.8 per cent year-on-year. AFP PHOTO/ Indranil MUKHERJEE (AFP)

India's second quarter Gross Domestic Product (GDP) data is due on Thursday, November 30 which is expected to see some moderation on a quarter-on-quarter basis. However, market experts believe the market might have discounted a slight moderation in Q2 GDP print and it will not affect the market sentiment significantly.

Abhishek Jain, Head of Research at Arihant Capital expects India's Q2 GDP print at 7 per cent, down from 7.8 per cent in Q1.

Jain believes several factors contribute to this anticipated slowdown, including rural economic challenges and delays in festive activities. Furthermore, a deceleration in government capital expenditure has had an adverse impact.

However, Jain underscored that this growth rate is still higher than current market expectations. The government's efforts, the resurgence of festive activities in Q3 and the anticipation of a robust Q4 will prevent a significant dent in domestic market sentiment.

Jain said investors should view any weakness in Q2 GDP on a quarter-to-quarter basis as an opportunity to enter the stock market.

"The expectation is that the temporary setbacks in Q2 will not have a lasting negative impact, and the Indian economy will regain strength in the subsequent quarters. Therefore, cautious optimism remains prevalent in the domestic market sentiment," said Jain.

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Also Read: India Q2 GDP preview: India's growth likely moderated to about 7% in Q2; experts expect further moderation

Brokerage firm Nirmal Bang expects Q2FY24 GDP growth at 6.8 per cent YoY, up from RBI’s estimate of 6.5 per cent while GVA (gross value added) growth is likely to come in at 6.6 per cent.

Moreover, Nirmal Bang expects core GDP growth (excluding agriculture and government spending) is expected to slow down only marginally to 8.4 per cent in Q2FY24 from 8.7 per cent in Q1FY24. It expects muted agricultural sector growth at 0.75 per cent YoY in Q2FY24, based on Kharif production estimates.

Also Read: S&P Global Ratings raises India's FY24 GDP growth forecast; cuts FY25 projection

On the other hand, industry (excluding construction), is expected to rise by 8 per cent YoY in Q2FY24 against 4.6 per cent in Q1FY24, supported by strong growth in Industrial Production (IIP) and corporate profitability. Services (including construction) are expected to come in at 7.3 per cent YoY (10 per cent in Q1FY24), with some drag from lower government spending, Nirmal Bang said.

Also Read: Morgan Stanley sees India GDP growth near 6.5% in FY24 and FY25

Nirmal Bang maintains its FY24 GDP forecast at 6.2 per cent.

"GDP growth is likely to decelerate in the second half of the financial year (2HFY24) on the back of a slowdown in post-festive consumption, an expected slowdown in credit growth and patchy rural recovery amid sluggish global growth," Nirmal Bang said.

Also Read: India's Q2 GDP number will surprise everyone: RBI Governor Shaktikanta Das

ICRA has projected the year-on-year growth of the GDP to moderate sequentially to 7 per cent in Q2FY24.

SBI Research forecasts that the GDP growth for the Q2FY24 should be at 6.9-7.1 per cent.

Barclays believes India’s GDP in Q2FY24 expanded by 6.8 per cent year-on-year, slower than the 7.8 per cent print in Q1FY24, but still showing robust sequential growth.

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.

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Published: 28 Nov 2023, 02:50 PM IST
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