Monsoon Stocks: There are chances of heavy rains in the country this year, if the monsoon is better then these stocks will show their strength

Monsoon Stocks 2024: The good news for the country’s economy is that this year the monsoon is expected to be normal. The main reason for this is ENSO transitioning towards La Nina, positive Indian Ocean Dipole and negative snow cover – which is the first such example in the last three decades. If we look at the historical trend during the La Nina year, most parts of the country are expected to receive more than normal rainfall except some areas of North and East India. While normal monsoon or better than normal monsoon reduces inflation, growth remains higher due to the acceleration in the work of farming.

At present, while better monsoon will benefit Indian Agriculture, companies related to agriculture are expected to get demand from it right now. Better agriculture means that rural income will also increase. At present, companies related to monsoon will benefit from this and its shares are expected to rise further. Brokerage house Antique Broking has released its latest report on monsoon and monsoon stocks.

Better monsoon boosts economic activities

Past trends suggest that a normal or above normal monsoon drives overall growth in the country’s economy, especially in agri activities. The brokerage believes that the rural economy is set to grow driven by other macro parameters such as lower food inflation, real rural wage growth, higher MSP price growth, election-related spending and increased economic activity post the elections. Management commentary from various companies also indicates that there are early signs of a pick-up in rural demand on a low base, which may get a further boost due to an above normal monsoon.

These sectors will benefit from better monsoon

The brokerage house says that our key indicators show that a) lower inflation leads to better performance in sectors like banking, auto, infrastructure and mid-cap; and b) higher GDP growth leads to better performance in capital goods, auto, infrastructure and hotel sectors. According to the brokerage, if the monsoon remains better as expected this time, then these sectors can outperform.

Keep an eye on these stocks

HULL

It is expected that near-term demand will gradually improve. The company is very confident about the mid to long term opportunities in Indian FMCG. Volume recovery has remained slow due to high levels of cumulative inflation in the last few years as well as weak monsoon affecting rural demand. Forecasts of above normal monsoon and improvement in macroeconomic indicators will help in the recovery.

Dabur

Given a normal monsoon, improving macros, continued government spending and low inflation, consumption trends are expected to gradually pick up over the next fiscal. Consumer demand is expected to grow gradually, driven mainly by the rural sector. Inflation is expected to remain subdued and a deflationary environment is expected in the near future. If the monsoon is good and the government remains stable, mid-single digit volume growth is expected.

Britannia

The company is anticipating the return of economic growth in the country this year. Consumer spending is expected to be positively impacted due to economic growth in the country.

Westlife Foodworld

With the improvement in the macroeconomic environment and the external challenges being addressed, the Company expects to improve its performance with strong growth momentum.

Vedant Fashion

Demand is expected to improve from 2QFY25. The normalized base of FY24 and more wedding dates in the second half will benefit. The company expects improvement in the second half of FY25.

Shoppers Stop

Weak wedding season, prolonged winter and EOSS sales impacted the quarterly performance. However, sales saw some improvement in March and recorded 9 per cent LTL. Management expects consumption demand to improve after the elections. Heat waves and elections may hamper demand in 1QFY25.

Hero MotoCorp

Wedding demand was very strong in April, leading to strong growth for the 2W industry as a whole. Demand is expected to continue to rise due to a normal monsoon. The company expects revenue to go into double digits in FY25 due to positive sentiment in rural and urban areas.

Contribution of monsoon to the economy

More than 60 percent of the cultivable land in India is such where there is no proper arrangement for irrigation. In such a situation, farmers in those areas depend on rain for farming. In this season, crops like rice, maize, pulses, cotton and sugarcane are dependent on monsoon. With the increase in production due to better monsoon, the prices of food items will remain under control. Let us tell you that due to the second wave of Corona virus, the pressure on the country’s economy has increased.

(Note: Here we have given information about the shares based on the reports of the brokerage house. Considering the market risk, take expert advice before investing.)