Markets eye stock re-ratings post release of govt's consumption expenditure data

livemint.com:

Following the government's capex-push led surge in infrastructure shares such as L&T, the stock market is likely to shift its focus to the consumption story, particularly in rural India. This shift aligns with the release of the National Sample Survey Office's (NSSO) delayed monthly household expenditure survey for 2022-23, which appears to support the Bharatiya Janata Party's narrative ahead of the Lok Sabha elections. The political narrative is expected to resonate within stock market trends as well, especially since the findings of the last survey for the year 2017-18 were discarded after results leaked to the press, showing a drop in consumption levels.

The latest results reveal that average Indian household spending has more than doubled in the last ten years, with a greater portion of expenditure going towards discretionary items such as clothes, television sets, and entertainment, while spending on food items has decreased. The share of spending on food dropped below 50% for the first time in rural India. Among food items, spending on cereals has decreased, with the largest share going to milk and dairy products.

In both rural and urban areas, households spent nearly as much on eggs, fish, and meat as on vegetables. Spending on processed food, takeaway, and dining out has risen in both rural and urban India. Stock analysts are, therefore, expected to push narratives around the re-rating of stocks that stand to gain from changes in consumption behaviour across the country.