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Wishing You a Joyous Dussehra! Celebrate the victory of good decisions in your financial journey!
Build a Balanced Portfolio: Get 20% off on two or more services. | Avail Offer
SEBI Registered: Research Analyst | Investment Adviser | Call: +91 97730 15000 | Email: research@stockaxis.com
September 03, 2018
|We are pleased to present to you our monthly market commentary and outlook for the forthcoming month. The ‘stockaxis’ Market Intelligence’ is a quick update on the markets for the month gone by and our view for the next month. Use our sharp and crisp synopsis to continue building your wealth!
Consumer Sector – on the growth path
Indian consumer sector has several drivers including – forthcoming general elections leading to higher spending on social schemes and rural infra projects, strengthening rural recovery resulting in higher disposable income and spending, GST implementation leading to market share gain by organized players, continuing urban consumption and ending of distribution disruption which was caused by demonetization and GST.
India’s structural consumption story is chugging along smoothly. Higher urbanization is resulting in higher middle-class population, appealing demographics where several millions are added to high disposable income category, government programs alleviating the poor above the poverty line etc. are primary reasons for aiding this story. India has been fortunate to have good monsoons which would augur well for farm income. This will be further boosted by increase in minimum support price of ~ 27% on farm produce and increase in rural development spending and National Rural Employment Guarantee Act (NREGA).
The urban consumption story is being supported by Seventh Pay Commission pay hikes and implementation of the One Rank One Pension (OROP) scheme which stipulates same pension, for same rank, for same length of service, irrespective of the date of retirement for the Indian armed forces and veterans.
One of the key beneficiaries from the consumer sector will be fast moving consumer goods (FMCG), which forms the fourth largest component of the Indian economy. Of this, the household and personal care segment comprises 50%, healthcare accounting for 31% and the balance 19% being the food and beverage sector.
Rupee Depreciation – sectors that will benefit
Due to several strategic and tactical reasons, the rupee has been steadily depreciating against the US$. Increasing interest rates in the US, increasing oil prices resulting in widening current account deficit, trade war between the US and China leading to competitive devaluation etc. have been the prime contributors to this depreciation.
Export oriented industries will be the immediate beneficiaries of this move. Leading ones are Information Technology, Pharmaceuticals, Textiles, Agriproduce and products, Chemicals, etc.
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