Will India’s consumption surge drive markets? Hiren Ved’s take on festive season optimism

Hiren Ved, Alchemy Capital, says India’s consumption revival is gaining momentum following tax cuts, GST reforms, and RBI measures, boosting festive-season spending. FMCG, quick commerce, and retail sectors are poised for near-term gains, while defence remains a decade-long strategic story with rising domestic capabilities, offering both short- and long-term investment opportunities.

There is a lot happening on the global front. How do you read the current sentiments across markets?

Hiren Ved: Absolutely. The missing link in the economy—consumption—was struggling, and the government has taken an unexpected but positive step. While the actual rates are not yet out, combining the one trillion of tax cuts from the budget with an estimated 1.25–1.75 trillion stimulus, this represents substantial overall support. Both monetary and fiscal policies are now strongly pro-growth, which should drive very strong consumption trends this festive season.

Given that tax cuts are yet to play out and credit growth expansion is awaited, consumption seems critical for the government. As an investor, how should one interpret this shift, particularly in the FMCG staples segment?

Hiren Ved: Some consumption exposure had shifted from FMCG staples to retailers and quick commerce companies because they were growing faster. That trend is unlikely to change. While staples will benefit, a leveraged play on consumption could be to invest in quick commerce and large retailers, which should see significant volume growth from the tax cuts. Investors can pick and choose across staples, autos, or platform companies, all of which should benefit.

But how much more can one invest at a level of 320?

Hiren Ved: It depends on how investors are positioned. There is still significant upside for platform companies as they are a derivative of FMCG growth. The whole ecosystem should benefit from this policy support.

With RBI measures, budget tax cuts, and now GST reforms, can we expect only positive momentum in consumption and overall macro conditions?

Hiren Ved: India’s macro fundamentals have always been strong, as reflected in the recent ratings upgrade. Strengthening domestic consumption is a smart move to offset any impact of slower exports due to trade and tariff uncertainties. So, domestic consumption will provide a near-term cushion and support overall growth.

On the defence sector, the Prime Minister mentioned Mission Sudarshan Chakra for developing indigenous aerial defence systems by 2035. Given high valuations after a sideways momentum, do you see upside for defence and shipbuilding?

Hiren Ved: Undoubtedly. Consumption may get a short-to-medium-term boost, but defence is a strategic, decade-plus story in India. Recent geopolitical developments, including US tilt towards Pakistan, make it imperative to accelerate domestic defence technology. While the consumption boost is immediate, defence spending and domestic capabilities will continue to rise, and we remain very bullish on this sector.