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The moderation in the pace of new investments suggests that the capex cycle is not yet on a durable, self-sustaining path, foreign brokerage, Nomura said in a report.

Quarterly fluctuations aside, the size of new investment projects announced remains low by historical standards, it said.

The latest data from the Centre for Monitoring the Indian Economy (CMIE) showed a slowdown in the pace of new investment projects announced in Q2 2023 to Rs 6 trillion from Rs 12.2 trillion in Q1, but up from Rs 5.8 trillion a year ago.

On a 4-quarter rolling sum basis, new investments stood at 11.2 per cent of GDP in Q2, lower than the 11.4 per cent in Q1, but up from 9.6 per cent a year ago.

On a 4-quarter sum basis, the pace of manufacturing investments has moderated to 4.2 per cent of GDP in Q2, from 4.9 per cent in Q1 and a peak of 6.3 per cent in Q4 2022, led by a moderation in the machinery, metals and chemical sectors, the report said.

Infrastructure investments announced remain strong, and have risen to 6.4 per cent of GDP in Q2 (4q sum) from 5.8 per cent in Q1 and 4 per cent in Q4 2022, driven primarily by transport services, the report said.

Other investments announced, notably in construction & real estate also remain tepid, as per the CMIE data.