Normal monsoon can push rural consumption

Data released by global research firm Nielsen shows that rural consumption grew by 13.5% on a year-on-year basis between January – March 2018 as compared to 10% growth recorded in urban India. With GDP growth averaging 7.4% over the last 4 years and demonetisation impact wearing off, rural demand has held up.

If the monsoon turns out to be normal, as has been predicted so far (it will be the third consecutive year of normal monsoon), rural consumption will get further fillip in the second half of the financial year. With elections around the corner, analysts expect generous increase in minimum support prices for Kharif crops and this is also expected to drive rural demand.

Benefit from growth of rural consumption by buying the Rising rural demand smallcase.

Companies expected to generate higher earnings

The Straight Flush smallcase consists of dividend paying stocks that have recently undergone an earnings upgrade. An earnings upgrade means that compared to their previous prediction, analysts are now predicting that the company will generate more earnings. It also highlights the improving performance of a company and the positive cognizance of the same by market.

5 out of 7 stocks in the smallcase have price target of at least 10% above their current market price. All the stocks in the smallcase have at least 10% institutional holding indicating high management quality, good performance track record and expectation of bullish performance going forward.

Also, the Straight Flush smallcase has a momentum rank of 1 amongst all model-based smallcases in our universe. The smallcase has returned 21.41% over the previous year compared to Nifty returns of 12.94%.

Broadband to every citizen

Communications Minister, Manoj Sinha last week said that National Digital Communications Policy 2018 will be approved by the end of July 2018. Through the policy the government aims to provide broadband access at 50 megabits per second (mbps) speed to every citizen, attract $100 billion investment in the sector, and create 40 lakh jobs by 2022. He also said that the telecom sector received $6.1 billion in foreign direct investment (FDI) in 2017-18, up from $1.3 billion in 2015-16.

Benefit from the growth in digital infrastructure by buying Digital Inclusion smallcase. The smallcase has returned 15.58% over the previous year compared to Nifty returns of 12.94%.

Markets update

Markets were marginally up last week. Nifty ended up 0.46% at 10,817.7 and Sensex closed up 0.5% at 35,622.1.