Festive demand, GST cuts perk up consumption in Oct, Q3 looks 'sunny': SBI Caps

Economic Growth and Consumption - India's consumption surged in October, driven by the festive season and recent GST rate rationalization, indicating economic resilience despite global uncertainties [1][5] - The economy grew at a brisk pace in the first quarter of FY26, with real GDP expanding around 7.8% and nominal GDP rising close to 8.8%, supported by resilient domestic demand [4] Consumer Spending and Indicators - A 41% year-on-year increase in vehicle sales, record digital payments, and a 25% rise in Diwali sales to over ₹6 trillion highlight strong domestic demand [2] - Manufacturing PMI expanded sharply to 59.2 in October 2025, indicating buoyant demand and productivity gains [6] Credit and Investment Outlook - Bank credit is reviving, with the credit-deposit ratio exceeding 80%, and expectations of sustainable credit growth in the medium term [7][8] - Fresh term deposit rates are expected to have bottomed out, coinciding with renewed drivers of credit growth [8] External Factors and Trade - The rupee's decline against the dollar prompted the Reserve Bank of India to intervene, selling $7.7 billion in August to stabilize the exchange rate [9] - Foreign portfolio inflows into India recovered in October, although the trade deficit remains sensitive to changes in crude prices and gold imports [10]