Normal monsoons, low inflation & tax cuts to boost demand: PL Capital, PL Capital anticipates a 50 bps rate cut by RBI over the next 6 months

Mumbai: PL Capital, one of the most trusted financial services organisations in India, in its latest India Strategy Report stated that Indian markets, which had been under pressure in recent months due to FII selling, have staged a sharp recovery, delivering a 10% return on the NIFTY over the past six weeks. Q4FY25 results so far have exceeded expectations, with EBITDA and PBT (excluding Oil & Gas) surpassing estimates by 5.1% and 9.2%, respectively.

Consumer demand has remained subdued over the past few quarters. Although rural demand picked up following last year’s monsoon, urban demand faced several headwinds — including elections, extreme heat, prolonged monsoons, and a spike in food inflation in September. That said, early signs of recovery are emerging in urban consumption, with a gradual but sustained improvement expected in the coming quarters.

In FY25, agricultural production has recorded a growth of 6.8% in Kharif crops and around 3% in Rabi crops. Wheat procurement has reached 29.5 million tonnes, already exceeding last year’s 26 million tonnes—a development that will significantly enhance the government’s ability to control wheat prices during the off-season. Additionally, water reservoir levels in May are 22% higher compared to the same period last year. A normal monsoon is expected to sustain elevated water tables, which will positively impact the next Rabi crop as well.