India's manufacturing sector growth in Q2 FY23 likely to be weak: SBI

Beginning September this year, it signals of turning-points with increase in economic activity, making the Q3 FY23 GDP growth more optimistic, the report noted.

Net sales grew by 28 per cent in Q2 FY23, while bottom line was down by around 23 per cent. Further, corporate margin seems to be under pressure.

Several indicators suggest that the Indian economy is making resilient progress in Q2 FY23 in spite of the drag from global spillovers, elevated inflation and some slackening of external demand as geopolitical developments take their toll on world trade.

SBI, however, believes there is somehow a large disconnect between leading indicators and gross domestic product (GDP) growth since the onset of pandemic. Growth impulses continue to be strong and it may be better to look through the GDP headline numbers for a couple of quarters before arriving at a definitive conclusion about the growth trajectory, the report noted.

India has been confronted with high volatility in the forex market as well as elevated and persistent inflation brought on by external spillovers this year. How India deals with these challenges from a position of strength imparted by the resilience of its macro-fundamentals, buffers and sound macro management by policymakers needs to be watched, the SBI report added.

ALCHEMPro News Desk (DS)