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Good Monsoon Bodes Well for Rural India

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Government targets increase in foodgrain production

Last week, Union Commerce and Industry Minister, Suresh Prabhu said that the government has finalized a new industrial policy with a major focus on promoting industrial units in rural areas and that the same will be announced soon.

According to news reports, the government has set a target to increase the country’s foodgrain production by over 2% to a record 283.7 million tonne in 2018-19 crop year (July-June), which should be aided by a normal monsoon. Also, the government is expected to soon fix the MSPs at 50% over cost of production for all kharif crops, where not already done.

Good monsoon, coupled with government’s focus on building rural infrastructure, providing better agricultural support prices, focus on increasing farm incomes and creating job opportunities, bodes well for rural India. You can benefit from this trend by buying the Rising Rural Demand smallcase. The smallcase has returned 26.09% over the previous year compared to Nifty returns of 14.5%.

Safety in low beta stocks

Beta is a measure of volatility. A beta of less than 1 indicates that the stock is less volatile than the market index. Good quality low beta stocks limit portfolio downside during periods of market volatility.

The Safe Haven smallcase consists of stocks whose beta is less than 0.65 and which are rated BUY by more than 65% of the research analysts covering them. All stocks in this smallcase have more than 10% institutional holding, indicating high management quality and bright future prospects.

The smallcase has gained 2.15% during the previous week. It has returned 42.33% over the last 1 year compared to Nifty returns of 14.45%.

Markets update

Buoyed by hopes of good March quarter results, the markets last week closed up for the 5th consecutive time. Nifty closed up 1.21% at 10,692.3 and Sensex closed up 1.61% at 34,696.7. Domestic institutional investors bought Rs 2,649.6 crore worth of shares last week.

Abhishek Jadon

VP, Investment Products at Windmill Capital.

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