What is concerning market & what we are ignoring? Series -1

 

Things have already become expensive, and this festive season and the global winter will both will be on the expensive side. This year the clearance sell might be expensive sell and may not find many buyers. Home appliance makers hike prices ahead of festive season amid raw-material cost pressure.   The 7.1 % GDP expectation seems difficult.

The industry is facing higher prices for:

• Copper- +56% YoY
• Aluminium- +40% YoY
• Steel
• Crude-oil derivatives
• Freight/logistics

Currency movements are also adding to the cost pressure. Leading manufacturers (including Blue Star, Godrej, Haier, Daikin, LG, and others) have raised or announced hikes of 5–8% on air conditioners and roughly 3–4% (or higher in some cases) on LED TVs, refrigerators, washing machines, and similar products, effective from around 1 October.

This is significant because these commodities form an important portion of the cost structure of air-conditioners, refrigerators, washing machines, televisions, wires and other electrical products. Older inventory may cushion some early festive deals, but post-Diwali prices are expected to reflect the new levels more fully. Inflation will increase and with the fear of EL NINO which was got strong grip in the Indian ocean and the current El Niño is rapidly strengthening toward a peak around late 2026 and is projected to persist through February 2027. Crops will become more expensive which will force one more hike before March 2027.

 Those did not pass the price hikes of raw material we will find pressure in profit margins in 3^rd quarter and some part of it in 2^nd quarter results too.

Post Diwali you will significant pull back in demand and consumption. India’s retail CPI inflation stood at 4.82% in August 2026 (with food inflation higher), and the RBI has raised its FY27 projection to 5.2%, expecting a further rise into the December quarter partly due to food and fuel pressures. A recent repo rate hike reflects these concerns. The biggest question is that of cost pressure remains the same which is expected very much then headline inflation will force India to go for another rate hike before March 2027.

In the global context you will find this winter to be an expensive winter where energy cost will drive inflation making many countries to be uncomfortable. Now those who are expecting that Mr. Trump will loose the mid-term election and things will become easier, that is never going to happen and the market will not get a relief. His loss of mid-term will lead to more fiasco and pressure rather getting the matter resolved.  As the winter become more expensive for developing economies we will witness FED hikes in coming months.

Loan products becomes costlier followed with slowdown in hiring which leads to some setback in consumption. Most affected on a typical ₹50 lakh loan for 25 years at ~7.5%, the EMI could rise by roughly ₹817 per month if the full 25 bps is passed on (to ~7.75%). On the hiring side we find that over the full tenure this adds about ₹2.45 lakh in extra interest. For a 30-year loan the monthly increase is in a similar range (around ₹850–870 depending on the bank).

Freshers are facing a tougher environment.

The market is becoming more favourable to experienced professionals:

• Fresher hiring: +1%
• 4–7 years: -2%
• 8–12 years: +5%
• 13–16 years: +7%
• 16+ years: +5% Naukri

That is a meaningful signal: companies appear more willing to pay for immediately productive, specialised talent than to build large entry-level teams.

Conclusion:

Now the 7.1% GDP is unlikely to be achieved when the consumption slowdown is going to kick in. We don’t have a strong industrial consumption and rate-sensitive sectors will slowdown in spending. Elevated oil prices, geopolitical tensions (West Asia), and tighter global financial conditions could weigh on exports, the current account, and input costs.

EIA estimates roughly a 4% increase in electricity expenditure, with the West potentially seeing a 9% increase because of colder weather. The ECB has already highlighted that higher energy prices are eroding real disposable income and weakening consumer sentiment, with household consumption growth expected to slow.

Think about the global consumer chain:

Higher commodity prices

→ higher manufacturing costs

→ higher appliance prices 

At the same time:

Higher energy bills in developed markets

→ lower household disposable income

→ weaker discretionary spending

The 7.1% seems unlikely and we will witness cut in budgets and slow down in consumption in rural India as inflation bites the wallet of people. 6.5 % to 6.8% is much acceptable to project rather having a far flung hope. The Irony is that Indian markets are becoming more attractive and mid-small cap space is going to become more mouthwatering. This is an opportunity to invest with strong mindset of long term wealth creation. The Iran war might come to an surprise end at any point of time before March 2027 that will give a huge spike to market. Hence the current situation is an opportunity which needs to be taken into consideration and not to become fearful in terms of investing.