Stock Market Watch

Many companies with over-average rural exposure fare better in stock market

      India Inc's rural champions have probably never had it so good. The best monsoon in 15 years has erased bad memories of last year's drought and kindled hopes of a turnaround in demand for key products. At a time when the rest of India Incis either groaning under heavy debt or struggling to sell in a sluggish market, companies with heavy rural focus are literally licking their lips in anticipation of a surge in demand in India's villages and towns. Already, two-wheeler sales are inching up, tractor sales are booming and banks are hiring employees in far-flung regions, hoping to benefit from a monsoon that has increased the kharif area by 5% and water reservoir levels by 15%. 

       Deutsche Bank says in a report that years of above-average rainfall have increased rural prosperity and stock markets have responded by pushing up prices of companies with a strong rural presence. But there is an interesting divergence here. Companies with above-normal exposure to rural areas are doing much better than those with an equal split of urban and rural or with less than average rural presence. So, an M&M Financial, with 80% of income from rural areas, is outperforming Bajaj Finance and Shriram Transport; Emami and ITCBSE -0.65 % are outperforming Hindustan Unilever, Hero's traditional rural strength is helping its stock race past Bajaj Auto.

Stock Market Tips For Today 04-10-2013

BUY ASTRAZENECA PHARMA (LCP 896.3) ABOVE 903 TG-910-920
BUY FINTECH (LCP-159.55) ABOVE 161 TG-164-168

     
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