India Economy: How Industries Will Perform in the Second Quarter of Fiscal Year 2020 

The first quarter of 2019-20 was catastrophic for India as the GDP growth was at just 5%. However, as the domestic economy continued slowly in the second quarter as well, the government announced several incentives to help boost the economy up. But the Q2 of FY20 reportedly will see another set of weak numbers, as the US-China trade war continuing to negatively impact global growth.

However, industry experts believe the second quarter will not be as bad as the first and expect that these 5 industries are likely to perform well and hit India’s GDP which is projected to 6.9% for the fiscal year 2020.

Auto industry

The Indian auto sector continues to be in a recession because of weak consumer demand. However, it is going to be another dismal quarter for the auto companies, as low demand associated with an inventory correction and production cuts imitated a sharp drop in volumes across segments, and hitting the top and bottom lines. The market’s focus will now be on realisation per vehicle, following the discount companies had to offer to accelerate demand and the margin that will reflect the impact of fall in commodity prices. Net profit cut down badly due to lower realisation on the back of higher discounts.

Capital Goods

India Capital Goods has a market size of $43.2 billion. For the Q2 of FY20, revenue and net profit are projected to demonstrate decent year-over-year growth due to increased execution of pending orders, especially by companies from the engineering and T&D segments. However, private sector capital expenditure (CAPEX) is yet to lift up and so, the order inflow will be under pressure, except for a few companies like L&T. The new taxation rule, only a 15% tax for new manufacturing facilities that come up by 2023, should also lure global manufacturers, resulting in private Capex revival in the future.

Banking Sector

As consumer-facing banks will report stable net profit growth, around 30% year-over-year, most of the aggregate net profit growth is predicted to come from corporate facing banks because of reduction in asset write-down and low base effect. SBI, ICICI Bank and Axis Bank, for instance, are expected to report more than 100% net profit growth year-over-year.

IT Sector

Due to uncertainties created by the ongoing trade war between the US and China, some companies are postponing orders, whose situation is under control for Indian IT companies. According to Dhananjay Sinha, Head of Strategy Research, IDFC Securities, the impact of the trade war is limited to Indian IT companies because the US is still doing well compared to Europe. Amongst large caps, as TCS and Infosys are projected to report steady performance, Wipro is expected to lag.


For the last few years, the pharma industry has been a mixed bag. Since the companies in this sector continue to face pressure from their US businesses, their domestic divisions continue to perform well. Experts believe mixed earnings in the pharma sector for the second quarter of the financial year 2020. There may be some optimistic surprise by large exporters, mostly because the US FDA-induced problems are getting solved. While the US continues to remain a key earnings driver for Indian companies, the generic segment has been hit by compliance-related issues.

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