PL Capital Predicts Strong Revival in Domestic Demand
Mumbai: PL Capital, one of India’s most trusted financial services organizations, has highlighted in its latest India Strategy Report that conditions are ripe for a strong boost in domestic demand. The report cites multiple tailwinds, including lower inflation, normal monsoons boosting rural incomes, and a fiscal boost from ₹1,000 bn tax cuts in FY26, which are expected to sustain beyond the festive season.
Key Drivers of Demand Revival
The momentum is expected to strengthen further in 2H26 with the transmission of RBI’s 100 bps rate cuts, lowering EMIs and stimulating demand for housing, automobiles, and personal loans. Additionally, GST 2.0 reforms, which rationalize tax slabs and reduce prices across automobiles, durables, staples, and medicines, are poised to trigger broad-based consumption.
Market Resilience
The report notes that Indian markets have displayed notable resilience, maintaining a largely flat trend despite penal tariffs from the US and FII outflows of ₹410 bn. Corporate earnings have been reasonable, with sales, EBITDA, and PAT broadly in line with expectations.
NIFTY Target
PL Capital derives a 12-month NIFTY target of 27,609, based on a 15-year average PE of 19.1x applied to March’27 EPS of ₹1,445. The report emphasizes that reviving consumption demand is critical to sustaining India’s growth trajectory.
Sectoral Outlook
PL Capital maintains an overweight stance on Banks, Healthcare, Consumer, Telecom, Auto, and Capital Goods, while remaining underweight on IT Services and Commodities. The firm expects a revival in domestic consumption and has accordingly raised weights in Automobiles and Consumer, while trimming exposure to Capital Goods, Healthcare, and Banks.
GST 2.0 Reforms
The report highlights that GST 2.0 reforms aim to simplify the tax system, reduce classification disputes, and boost consumption by easing the tax burden on several everyday goods. The proposal aims to reduce the existing four GST slabs to mainly two—5% and 18%—and is expected to have a positive impact on consumption and economic growth.
