From Auto to Logistics: Key sectors to track this Diwali and Dhanteras

This year, the Chaturdashi tithi (for Chhoti Diwali) and the Amavasya tithi (for main Diwali) overlap within the same 24-hour period, which is why both will be celebrated on October 20, 2025.

The consumption boost, first in the form of nil income tax up to ₹12,00,000, announced in Budget 2025-26, and then GST reforms in September, has shown the positive impact and is expected to reflect increased consumption and demand in the coming quarters.

The GST Council, in its 56th meeting on September 3, 2025, approved significant tax structure reforms, simplifying it to a two-tier system of 5% and 18% effective September 22.

Besides, the RBI has reduced the repo rate by 100 basis points (bps) since February 2025, thus giving a fillip to the overall consumption, spending, and lending.

Outlook for Samvat 2082

Indian equity markets underperformed over the past year (Samvat 2081) due to multiple global and domestic headwinds. Subdued corporate earnings, valuation concerns, the exodus of foreign institutional investors (FIIs), geopolitical tensions, and the US tariff measures impacted investor sentiment.

However, for the coming future, analysts note that the near-term volatility persists amid global uncertainty and trade tensions, but current weakness—driven by global rather than domestic factors—offers long-term investors opportunities to accumulate quality stocks at attractive valuations for potential outperformance till next Diwali.

Sectors in focus

Recently, India's largest carmaker, Maruti Suzuki India (MSIL), said it received over four lakh bookings and retailed a record 2.5 lakh units in the last one month, making it the best-ever festive season for the company, thanks to a strong demand for entry-level cars.

The share of the company's entry-level cars in the overall sales has also gone up in the last one month, aided by price cuts owing to GST rate rationalisation with effect from September 22.

Besides, the auto component sector is also expected to do well.

The GST rate cuts will boost growth for the Indian auto industry. More importantly, several auto ancillaries should grow much faster than the underlying auto industry growth due to increasing content per vehicle (CPV). Premiumisation in the Indian auto industry, whether it is the increasing share of SUVs in Indian car sales or of premium bikes in motorcycle sales, is a major driver of this trend, said Anubhav Mukerjee, Partner at Prescient Capital.  

The expert further said that several ancillaries are pursuing the substitution of imported components from China and other countries, especially in the EV space. So, entry into EV parts like motors, controller units, chargers, automotive displays, etc., is opening new growth avenues for well-run listed auto ancillaries.

Terming the GST reforms as a 'game changer', Tata Consumer Products Ltd (TCPL) Managing Director & CEO Sunil D'Souza said it will accelerate urban demand, drive up consumption, and help the industry and GDP grow, bringing a fundamental shift in the economy. This will also encourage a shift from unbranded to branded food products, as the difference is only 5% in some of those commodities now. This will also promote upgradation or consumers entering into new categories, as it will leave extra money in the hands of the consumers.

"I am saying it is beyond a festive thing. It is a structural change in the economy, and I think this will drive up domestic consumption and therefore, GDP growth," said D'Souza, adding, "I think there have been multiple levers put in place to drive domestic consumption, and it will create companies of scale.

When asked about urban consumption, D'Souza said he is in the "opposite camp" against people who say demand has softened.

"Urban demand is not slowing. I see demand already there. It will accelerate from here," he said, adding, "I think when people talk about urban consumption softening, you have to remember there are channels which are shifting also.

Several small-cap companies in sectors like transformers, wires & cables, generators, transmission EPC, etc., with all-time high order books and strong growth prospects are available at attractive valuations, they note.

"Several chemical manufacturers have seen huge margin erosion and no share price appreciation in the last 5 years. Now there are signs of cyclical turnaround with demand revival and chemical prices bottoming out that should drive good earnings growth and help many Indian chemical makers to post good returns going forward," Mukerjee added.

Around September 2024, RBI and MFIN (the self-regulatory industry body) refined guidelines for tightening MFI lending to customers and capped the total amount and the number of borrowers a customer could borrow from. This deteriorated the asset quality of loans in the short term, and the microfinance stocks corrected by 33-50% from their peak.

The best-in-class lenders have tightened their lending processes since Sept 2024 and are back to demonstrating growth in their loan book. It is expected that MFI companies and their stocks will demonstrate good growth in H2 FY 26, analysts add.

"Listed logistics companies had corrected by 33-50% from their peak valuations. In the last one year, the three e-commerce logistics players have seen consolidation/M&A, and as a result, irrational pricing and competition for market share have also stopped,” the expert added.

This has improved the unit economics of e-commerce logistics companies. On the side, a cut in GST rates has provided a fillip to the demand for autos, a large end user of logistics. “We believe good growth in demand for 2W/4W will also lead to good demand visibility for their logistics partners," Mukerjee added.