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The Economic Times Wealth, July 11-17, 2016

Cover Story

STOCKS

TO

PICK
NOW
Several themes could influence the
markets in the coming months. Find out
which of these should you bet on.
SANKET DHANORKAR
he Brexit referendum, decision
on US Fed rate hike, the Seventh
Pay Commission, monsoon, fate
of the Goods and Services Tax,
banks asset quality review and
crude oil price movement are just some of
the events that are shaping the stock market
today. This is a lot to wrap ones head
around. So, we have identified some of the
bigger themes that have caught investors
fancy to find out whether they are worth
pursuing, and the companies that stand to
benefit within the broader themes.

Monsoon and rural consumption

The progress of the ongoing monsoon could
well be the biggest theme influencing the
stock market. Expectations have been built
in for above average monsoonforecast by
both India Meteorological Department and
private weather forecaster, Skymet. Northwest India, which includes the crucial agricultural belt of Punjab, Haryana and Uttar
Pradesh, is now 11% rain surplus for the season. After two consecutive years of below
normal rainfall and near-drought situation
in some areas, a good monsoon will spur agricultural production, reduce inflationary
pressure on food prices, prop up rural incomes and, thus, boost rural consumption.
This will support earnings growth for many
Indian companies. If rainfall remains adequate as forecast for July and August, it
could provide the much-needed support for
growth and inflation, says a Standard Chartered report. This would be critical given
close to 60% of the crop sowing happens in
July and August.
It is usually suggested that a good monsoon can provide a fillip to automobiles,
FMCG, fertilisers and financial services sec-