Patience needed in FMCG, gradual IT recovery ahead: Sunil Subramaniam

Synopsis

Market expert Sunil Subramaniam suggests consumer staples may lag discretionary spending due to GST impacts and weak rural demand, highlighting monsoon's importance. He sees technology as a fresh entry point, with AI concerns priced in and IT firms boosting investments. Manufacturing growth hinges on FDI, tech transfer, and global partnerships for scaling up.

India’s equity markets are seeing evolving sector dynamics as investors weigh the outlook for consumer staples, reassess opportunities in technology, and keep a close watch on the country’s manufacturing push. Speaking on ET Now, market expert Sunil Subramaniam said consumer staples are likely to remain a relatively lower priority compared with discretionary consumption, explaining that GST changes have mainly resulted in higher quantities in small packs rather than direct price benefits for consumers.

He noted that while this could support volumes marginally, weak rural demand — linked to softer farm incomes — continues to weigh on the sector, making the upcoming monsoon and improvement in rural liquidity important factors, alongside commodity costs, currency trends and foreign investor flows.

Turning to the technology space, amid recent swings and optimism surrounding developments such as the partnership between Infosys and Anthropic, Subramaniam said the sector offers a case for fresh entry, arguing that prolonged underperformance due to artificial intelligence concerns has already been priced in.

He said Indian IT firms are strengthening investments in AI, dividend yields have become more attractive, and greater clarity on strategies in the coming quarters could help sentiment improve, recommending staggered buying with a preference for large-cap companies.

On India’s manufacturing trajectory — spanning electronics manufacturing services, data centres and advanced industries — he said sustained progress will depend on attracting foreign direct investment and fostering partnerships that enable technology transfer. While acknowledging that India has shown strong capabilities in areas such as defence, he emphasised that scaling up manufacturing broadly will require global firms setting up operations locally, continued policy support and a gradual move up the value chain.

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