Falling sales, especially in June, meant manufacturing activity slowed during the month on a slower growth in new orders, according to the Nikkei India Manufacturing PMI. The inventory of finished goods rose from a 21-month low in May but remained below 50, implying low demand, according to a Nomura research note.
The demand is slowly emerging from modern retail and general stores, Sunil Kataria, business head for India and Saarc, Godrej Consumer Products Ltd., told BloombergQuint recently. It will pick up by August, he had said.
Gaurang Shah, head investment strategist at brokerage Geojit Financial Services agreed. “It’s only a matter of another month before the situation gets to normal.”
Transition Pain Still Exists
Several retailers were still adjusting to the GST transition till the first half of July, Credit Suisse’s channel checks for HUL revealed. The FMCG giant expects it will take a quarter or two for retail channels to normalise, the brokerage’s note said.
A pick-up will begin closer to Diwali and margins will be under pressure till then, said Sanjiv Bhasin, executive vice president-market and corporate affairs at brokerage IIFL.