*Current Market Analysis:* *1. Global Factors Driving Market Correction* • US Treasury Yields & Stronger Dollar: Rising yields and a strong dollar have led to Foreign Institutional Investors (FIIs) pulling out money from emerging markets. • FII Outflows: Around $8–$9 billion of FII outflows in the past month have contributed to market correction. • Expensive Valuations: The correction is also influenced by high valuations and temporary economic slowdown. *2. Union Budget Impact on Consumption* • Focus on Consumption Revival: The government’s ₹1 lakh crore tax stimulus aims to boost urban discretionary spending. • Expected Income Boost: 1–2 crore taxpayers may see a 4-6% increase in disposable income, positively impacting sectors like: o Consumer durables o Automobiles o Quick service restaurants (QSR) o Travel & leisure • Upcoming Pay Commission: Expected salary hikes could further stimulate demand. *3. RBI Policy & Market Reaction* • Policy In Line with Expectations: The RBI maintained a neutral stance with a 25 bps rate cut, avoiding an aggressive approach. • Market Sentiment: The correction is driven by external factors rather than domestic policy decisions. *4. Sectoral Outlook* • Banking & NBFCs: o Banks face soft earnings growth due to potential rate cuts and margin pressure. o Some NBFCs with strong franchises may benefit from declining interest rates and improving credit conditions. o Private banks currently offer value opportunities due to healthy Return on Equity (ROE). • Consumer Discretionary: o The sector, after years of weakness, is set for recovery due to demand revival. • Capex & Manufacturing: o Government-led capex is slowing, but power, renewables, and electronics manufacturing remain growth drivers. o Sectors like solar, battery production, and semiconductors are expected to gain momentum under the Make in India initiative. *5. Economic Outlook* • Urban Demand Weakness: Urban consumption remains weak, while rural demand has started picking up. • GDP Growth Prospects: o Growth is shifting from government-driven capex to private sector-led investments. o Manufacturing and infrastructure development will be key drivers in the coming years. Conclusion • Market correction is largely driven by global factors rather than domestic policies. • Urban consumption revival, supported by tax cuts and wage hikes, will be crucial in stimulating economic growth. • Banking & NBFCs, consumer discretionary, and manufacturing sectors offer long-term growth potential despite near-term volatility.