After the Pay Commission, what's in store for stocks?

Even before the Government green signalled the Seventh Central Pay Commission recommendations, consumption stocks have been in party mode. With over 20% hike in salaries, allowances and pension, the expectation is that sarkari employees will spend more, boosting demand for autos, consumer durables, housing and also discretionary consumption goods. But will this rub off on corporate earnings and stock price appreciation? Some experts caution that, while there will be a consumption boost, the effect of Pay Commission has already been taken into account in earnings estimates and thus may be factored into prices. "From a sector perspective, in the 4-wheelers segment, reasonable volume growth of ~12% has already been built in. In 2-wheelers, there is not much upside since they are easily affordable and do not carry significant aspirational value both in the urban and semi-urban markets (50-60% shar