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Below the View on Q2 FY25 GDP: Temporary Dip Amid Strong Consumption Trends, Says By Dr. Vikas Gupta, CEO and Chief Investment Strategist, OmniScience Capital

The Q2 FY25 GDP growth came in below expectations, but there are several encouraging signs within the data. Private consumption grew at an impressive 6%, significantly higher than both the overall GDP growth rate and the 2.6% recorded in Q2 FY24. This dispels recent concerns about weakness in private consumption. Government consumption improved from the previous quarter but was lower compared to the same period last year, likely reflecting cautious spending ahead of elections.

The primary sector showed stability with marginal GVA growth, although mining was impacted by the monsoon. In the secondary sector, manufacturing growth remained subdued, but the construction sector continued to perform robustly. The highlight was the tertiary sector, which grew strongly at 7.1%, underscoring the resilience of private and government consumption.

We believe this dip in GDP growth is temporary, driven by seasonal monsoon effects and election-related factors, and should begin to correct by Q4 FY25. For equity markets, this data is unlikely to have a significant impact. Any short-term dip in market sentiment could present an opportunity for investors with surplus funds to build long-term positions, given the underlying strength in key consumption and service sectors.

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