Festive Season: Golden Moments

The festive season in India, particularly during October to December, is crucial for companies across various industries, driving substantial sales and revenue growth. Retailers, ecommerce platforms, and consumer goods manufacturers experience a surge in demand as consumers engage in gifting and shopping for celebrations like Diwali and Christmas. This period can contribute significantly to quarterly sales, often accounting for 30-40 per cent of total annual revenue for many businesses. Industries such as electronics, apparel, and FMCG see heightened activity, leading to increased production, marketing efforts, and inventory turnover, ultimately bolstering overall fiscal performance and enhancing economic momentum during this vibrant season.

This festive season is also shaping up to be a record-breaker across multiple sectors. Ecommerce platforms are expected to generate $12 billion in sales between October and December 2024, a 23 per cent increase from last year’s $9.7 billion, driven by strong demand for fashion, electronics, and personal care products. Quick commerce alone is predicted to contribute $1 billion in gross merchandise value. Early reports show sales of Rs 55,000 crore within the first week, a 26 per cent jump from 2023. In the automotive sector, Hyundai Motor India made a landmark debut on the National Stock Exchange, becoming only the second pure-play passenger vehicle maker listed in India. This debut is part of Hyundai’s broader strategy to enhance global valuations. 

The gold market is also seeing a resurgence, with demand expected to remain strong during Dhanteras and Diwali, particularly driven by wedding-related purchases.

Ecommerce Boom Continues
Various industry reports are pegging record-breaking online sales this festive season. A broad consensus estimates a 20-25 per cent growth in overall sales generated via various online marketplaces, reflecting the increasing demand for ecommerce across India. Shiprocket, a prominent ecommerce enablement platform, projects the market will reach an impressive $12 billion between October and December 2024, up from $9.7 billion in the same period last year. This surge translates into a 23 per cent increase, driven by a robust demand for fashion, electronics, beauty, and personal care products. A standout figure from the report is the expected contribution of $1 billion from quick commerce, a rapidly expanding segment that caters to the demand for fast deliveries, especially in urban areas. 

Notably, within the first week of festive sales alone, online platforms recorded a staggering Rs 55,000 crore in sales—a 26 per cent jump compared to 2023. Popular categories like mobile phones, electronics, and consumer durables dominated the market, accounting for three-fourths of the total sales. 

This remarkable growth is supported by early-season momentum. Ecommerce consultancy Datum Intelligence noted that the first week of sales from September 26 accounted for 55 per cent of the projected festive ecommerce sales. Leading platforms like Flipkart and Amazon India kicked off their highly anticipated Big Billion Days and Great Indian Festival sales, respectively, on September 27, with early access for loyalty members. Meesho also joined the race, reporting a 40 per cent year-over-year increase in orders, driven by a surge in demand from Tier-2 and smaller cities, where 45 per cent of shopper’s hail from Tier-4 cities and beyond. Furthermore, quick commerce platforms like Blinkit, Zepto, and Swiggy Instamart are also vying for a share of the festive spending spree. This season is shaping up to be a record-breaking one, signalling India’s growing appetite for online shopping.

This festive season has started with a bang, especially for India Inc. The stock market debut of Hyundai Motor India, the second-largest carmaker in the country, marked a significant milestone on October 22 when it got listed on the National Stock Exchange (NSE). This debut also makes Hyundai Motor India only the second pure-play passenger vehicle manufacturer to be listed on the Indian exchanges, following in the footsteps of Maruti Suzuki. This listing is particularly significant for Hyundai's parent company, Hyundai Motor Co. (HMC), and the Indian stock market, as it represents the largest public offering in the country’s history.

Gold: Fatal Attraction
High gold prices and the inauspicious period from mid-September to early October, traditionally keep consumers away from purchasing valuable items like jewellery. However, with the arrival of the festive season, there are early signs of a resurgence in gold demand, particularly driven by wedding-related purchases. Retailers are leveraging targeted marketing campaigns to stimulate this renewed interest. 

Commenting on festive expectations, Colin Shah, MD of Kama Jewellery, expressed optimism: “The demand for gold usually rises during the festive season. The yellow metal holds great cultural and sentimental value in the country. Since Dhanteras and Diwali are approaching, we expect demand to remain upbeat compared to last year. Geopolitical tensions and a low interest rate regime will likely support gold prices, which are expected to touch $3,000 per ounce internationally and upwards of Rs 80,000 per 10 grams domestically.” 

Although the initial surge following the import duty cut has slowed, the demand is expected to rise, especially in rural areas. Favourable monsoon conditions and increased agricultural activity are set to boost rural incomes, driving gold purchases. This trend is further supported by strong investment demand for gold bars and coins, encouraged by expectations of rising prices.
Gold’s accessibility has also been enhanced by robust online sales, making it easier for consumers to invest. Although domestic gold prices have been trading at a slight discount since mid-August, this reflects a normalization in demand after the initial surge, leaving the market poised for continued growth as key festivals approach.

Home Buying Sentiments
Building on the strong sales performance throughout CY 2023 and the January-September 2024 period, the housing market remains well-positioned for continued growth as we approach the festive season. Traditionally, this time of the year is considered auspicious for home purchases hence the sector will witness a surge in demand from first-time homebuyers who have been hesitant. "Homebuying sentiments have stayed positive in CY 2024, with over 1,50,000 units sold in H1 alone, marking an increase over the same period in CY 2023. However, rising property prices and global uncertainties may prompt potential buyers to carefully consider their decisions as they weigh the current market dynamics," says Anshuman Magazine, Chairman & CEO India, SE Asia, ME & Africa, CBRE. 

The luxury housing segment, particularly in the Rs 2-4 crore and above range, continues to attract interest from high-net-worth individuals (HNI) and non-resident Indians (NRI). This demand is driven by a desire to fetch higher return on investments amid global economic uncertainties. Moreover, an emerging segment of upper-middle-class buyers is increasingly willing to allocate larger budgets to enhance their lifestyles, indicating sustained robust activity in this space.

Market Expectations
Historically, Indian stock markets exhibit a bullish trend during the festive period, particularly around Diwali, which is considered an auspicious time for investments. For instance, in 2020, the BSE Sensex surged over 8 per cent during the October-November period, fuelled by optimism surrounding economic recovery post-lockdown. Similarly, in 2017, the Sensex experienced a remarkable rally, climbing approximately 12 per cent during this festive season, driven by strong corporate earnings and positive investor sentiment. This phenomenon is often attributed to increased consumer spending and optimism in the economy. The period typically witnesses a surge in market participation, driven by retail investors and positive sentiment in sectors like consumer goods and gold. Notable stock market rallies have been recorded in years when key economic indicators show growth, reflecting the festive spirit and heightened investor confidence. Overall, the festive season tends to be a significant driver of market performance in India.