India Inc is planning to increase its capital expenditure in the next few months. This was after it received relief from the prolonged input price pressures that supported the uptick in the profitability of corporates in the March quarter of FY23. While this is encouraging, recovery in consumption has been slow and uneven. While urban demand is propelling growth, rural demand continues to remain stagnant and is cause for major worry among CEOs.

Thus, a consistent revival in domestic demand remains critical for the performance of corporates in the coming quarters, say analysts. The cooling down of inflationary pressures is a positive for consumption in the economy. Sectors with exposure to external demand will continue to face headwinds from the global slowdown. There are positive signs for capex revival in the economy amid the government’s sustained capex push, improving private sector investment intent and interest rates seeming to have peaked. This bodes well for the infrastructure and capital goods-related sectors. Overall, the performance of corporates in the coming quarters will depend upon the unfolding of the global growth scenario and domestic demand conditions, as well as impending elections in several states.