Consumer Discretionary To Benefit As Disposable Income Rises, Says Franklin Templeton's Ajay Agral
Tax-cut effect has started to trickle in and more rate cuts are expected from the Reserve Bank of India, Franklin Templeton Senior Vice President and Portfolio Manager Ajay Agral said.
Consumer discretionary segment, which has seen some demand stress, will likely revive as disposable income increases amid tax cuts and loose monetary policy in India, said Franklin Templeton Senior Vice President and Portfolio Manager Ajay Agral.
The effect of tax cut has started to come in from April. It's around $10 billion stimulus for the middle-class consumers, according to him.
In the budget for financial year 2026, Finance Minister Nirmala Sitharaman had announced no tax on income up to Rs 12 lakh per annum.
The Reserve Bank of India has delivered cumulative rate cut of 50 basis points, which will also incentivise middle-class people. Franklin Templeton is expecting two more rate cuts in the FY26, Agral said.
An extra $15 billion is estimated to be at consumers' disposal, which is expected to boost urban consumption, he told NDTV Profit.
ranklin Templeton Senior Vice President & Portfolio Manager Ajay Agral was speaking to NDTV Profit Executive Editor Niraj Shah at talking point show.
The extra money will go into consumer discretionary items, Agral said. Quick commerce, food delivery, automobiles may get more benefits. Franklin Templeton is giving preferences to food services and quick commerce segment in their portfolio.
Airlines are going to be a structural secular theme because more people will choose flight rather than train.
There is supply constraint for various reasons and it was very severe in the last few quarters. Going forward, supply will not improve at the same rate demand is growing.
In hotel segment, similar story is about to play out, Agral said.
In the consumer staple segment, volume growth was tepid, which is likely to continue, he said.
Large Caps Fairly Valued
Indian markets are fairly valued in terms of large-cap, according to Franklin Templeton. Mid-cap and small-cap valuations are on the higher side. Mid-cap is closer to 29 times the 10-year average, which is 35% premium to the large-caps, he said.
Earnings for March quarter were up to the mark. However, expectations were meagre. Earnings growth in financial year 2026 is estimated to be around the range of 11–13%. Earnings growth can be higher because of near-term positive momentum expected, Agral said.
