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4 sectors to watch this Diwali
ASeveral sectors in the Indian economy ride the wave of high demand during Diwali. After all, it is considered auspicious for making big purchases. This increase in consumer spending helps certain industries perform in the country. Here’s a look at some of the sectors that profit from a festive season:
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Airline
You often find many people head back to their home cities during the festive season. Many others take advantage of the holidays to take a break. Irrespective of the reason, the aviation sector tends to benefit with a higher demand during the festive season. This year too, airlines in India are expected to witness robust demand this year’s festive season. But, that may not translate into profits for the industry. The operators are wooing passengers by offering them steep discounts. Plan fares have dropped 40-50% compared to last Diwali, according to a Livemint report.
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Auto
One of the sectors to benefit the most during the festive season is the auto sector. Diwali is the new year for many. And they often make big purchases. To woo more customers, automakers announce myriad discounts and offers. Currently, car makers are offering cashbacks, exchange, and discounts up to Rs. 1 lakh to attract customers – a trend that has been reported by several media outlets. But media reports suggest that people are expecting prices to come down further due to the tax cuts made by the GST council meet in October. As a result, buying sentiment is expected to remain low this festive season.
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Financial services
People traditionally purchase home, car and electronic items during Diwali. This is when there is a surge in demand for personal loans, thereby benefitting banks and non-banking financial institutions. After all, banks and financial institutions earn from the high interest rates on loans. This is the source of their profits. So, you may want to keep an eye on credit data too this festive season.
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Gold
The first day of Diwali is Dhanteras—the day of purchase of gold. Naturally, Diwali sees a surge in demand for gold. This especially true this year because of the government’s decision to relax norms when it comes to buying gold. The government had earlier mandated furnishing of PAN and Aadhar cards for buying gold worth Rs 50,000 and above. But, the government has raised that limit to Rs 2 lakh. The tightening of norms was done with an intention to tackle money laundering, but a market backlash compelled the government to reverse its decision. Several media reports suggest that there could be a marked rise in demand on Dhanteras – the day when Indians buy the yellow metal in droves.
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8.4%
In the 10 years between 2007 and 2016, the Nifty fell 6 times and rose 3 times in the Diwali month. Amongst these three years, the Nifty jumped the highest--8.368%--in the year 2011. This came after four years of continuous loss, including the year 2009 which saw the Nifty fall as much as 30%.
