● Efforts to Boost Consumption: The government is proactively addressing the recent economic slowdown by implementing measures aimed at boosting consumption. These include cuts in personal income tax rates, reductions in interest rates, direct benefit transfers (DBTs), and now restructuring of the Goods and Services Tax (GST). GST 2.0 reform is expected to drive consumption growth significantly and same is visible in earnings call commentary of companies so far.

● Loan Growth Pick-up is Visible: System-wide loan growth which was decelerating from last few quarters have started to improve with system loan growth touching double digit. The system loan growth acceleration is supported by various initiative like CRR cut, liquidity injection and more importantly rate cut.

● Impact of US Tariffs Brings Uncertainty: US tariff continues to have concern on export oriented sectors. We expect the negotiation between both the countries should lead to favorable rate for India. Till that happens, it would continue to keep uncertainties on the market.

● Outlook: The early and intense monsoon has negatively impacted short-term demand. Meanwhile, the ongoing slowdown in central government capital expenditure continues to weigh on corporate earnings and rising disposable incomes. However, recent policy initiatives—such as DBTs, personal income tax cuts, and potential GST rate reductions—should help support a gradual recovery in consumption. These efforts are further supported by RBI’s rate and CRR cuts to enhance system liquidity. We expect 1HFY26 continues to remain weak, however recovery is expected starting 2HFY26. Recent management commentaries have been encouraging on growth front