By Ruma Dubey
The Indian Meteorological Department (IMD) has announced that very soon entire country will be covered by rains. This is beautiful music to all our ears, surely inspiring us to dance the mad rain dance!
Good rains after two years of drought means water scarcity will finally diminish, farm output will go up and incomes across rural India will get a boost.
This is very good news as boost in rural income will give a spurt to demand and in turn, to India Inc, which for a long time has been betting big time on buying from rural India to prop up the economy. With more money in the hands of the villagers, naturally buying will go up.
Sectors that will gain:
FMCG is the first which comes to mind. There is sure to be a gain and with harvests expected to be bountiful this year, we could see a spike up in buying. The 7th Pay Commission could also add to this buying mood. So we need to keep a watch on ITC, Hindustan Unilever, Dabur, Marico, Nestle, P&G, Colgate. FMCG companies with huge cash reserves and wide established distribution networks would do well. And that means ITC, HUL and Nestle. How you wish Patanjali was also listed!!
Yes, people could also buy more two wheelers, cars, tractors. So companies like Bajaj Auto, Hero Honda, even Maruti, Escorts, Mahindra & Mahindra, could see a jump in demand. Maruti could emerge as a big gainer. Consumer durables, pesticides and fertilizers will also reap a bumper harvest.
Obviously, the biggest gainer would be the crops which have had bumper harvests. Sugar sector stocks are already doing very well as fall in production has already pushed up the prices. Dalmia Sugar and Balrampur Chini remain the sweetest of the lot.
Then there are sectors which would continue, irrespective of a drought or rains:
One such sector is IT and also power. If the Govt continues with its thrust on infra development, then we can expect capital goods, cement and infra companies to also to hold on. Drip irrigation could take off further. Power stocks, especially those with a higher portfolio of hydro power could this year show a higher income. Cement offtake as such is low during monsoon but we could see it take off in second half of FY17.
We, living in this generation of smart phones and mobile apps, where everything is at the tip of our fingers, cannot do anything when it comes to rains. Surely that means that the notion, that we are in control, is so unreal, so flimsy. The power of Nature, no technology, no mankind innovation can ever surpass.