Consumption driven stocks are in focus as rural demands are set to rise on good rains and as harvesting commences from mid-October coinciding with festival demands for Dussehra and Diwali in October.
Consumption driven stocks are in focus as rural demands are set to rise on good rains and as harvesting commences from mid-October coinciding with festival demands for Dussehra and Diwali in October.
Seventh pay commission pay outs of arrears and higher salary ahead of the festive season is likely to support the consumer goods demand growth.
Higher consumption is in turn likely to have a ripple effect on economic growth and investment cycle in the medium term.
The only near-term headwind to consumption call remains a potential postponement of discretionary consumption in expectation of a GST-driven price cut in consumer durables such as passenger vehicles and household goods, said analysts.
Consumption stocks – paints, auto, cement, FMCG companies companies are all expected to get a boost from improved demand on good monsoon rains with higher rural demand expectations.
“We expect rural demand to start picking October onwards as the fresh harvest starts coming-in. This will also coincide with the end of the Pitru Paksh on October 1 (or ‘Shradh’). This is considered as inauspicious for starting anything new and the end usually signals a pick-up in consumer demand,” said Indranil Sen Gupta and Abhishek Gupta, India economist, Bank of America Merrill Lynch.
